Document ID: chunk:federal_register_of_legislation:C2025C00029:section:9:p2
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 9 (pt 2/3)
Character Range: 3473733–3476194

tax (that is, paying an amount on account of income tax for which the entity is not liable at the time when the payment is made).
 (2) If an entity:
 (a) is liable to pay a *PAYG instalment; and
 (b) has a *PAYG instalment variation credit;
the PAYG instalment variation credit must be fully applied to reduce the liability for the PAYG instalment before any other credit or payment can be applied to reduce that liability.
 (3) An entity pays income tax if and only if:
 (a) the entity has a liability to pay the income tax; and
 (b) either:
 (i) the entity makes a payment to satisfy the liability (in whole or in part); or
 (ii) a credit, or an *RBA surplus, is applied to discharge or reduce the liability.
Note: The requirement in paragraph (a) means that the entity cannot generate franking credits by making a "voluntary" payment of income tax (that is, paying an amount on account of income tax for which the entity is not liable at the time when the payment is made).
 (3A) An entity pays diverted profits tax if and only if:
 (a) the entity has a liability to pay the *diverted profits tax; and
 (b) either:
 (i) the entity makes a payment to satisfy the liability (in whole or in part); or
 (ii) a credit, or an *RBA surplus, is applied to discharge or reduce the liability.
 (3B) An entity pays Australian DMT tax if and only if:
 (a) the entity has a liability to pay the *Australian DMT tax; and
 (b) either:
 (i) the entity makes a payment to satisfy the liability (in whole or in part); or
 (ii) a credit, or an *RBA surplus, is applied to discharge or reduce the liability.
 (4) Subparagraphs (1)(b)(ii), (3)(b)(ii) and (3A)(b)(ii) do not apply to the application of a credit allowable under or by virtue of section 45‑30 or 45‑215 in Schedule 1 to the Taxation Administration Act 1953 (these sections deal with credits for *PAYG instalments payable and credit on using a varied rate in certain cases).
 (5) The amount of the *PAYG instalment or income tax paid is equal to:
 (a) the amount of the liability, if it is satisfied in full; or
 (b) the amount by which the liability is reduced, if it is not satisfied in full.
 (6) If:
 (a) a surplus in an *RBA of an entity is applied to satisfy a liability of the entity to *pay a PAYG instalment in respect of an income year; and
 (b) a credit allowable under section 45‑30 in Schedule 1 to the Taxation Administration Act 1953 in respect of that income year is included in the RBA; and
 (c) the