Document ID: chunk:federal_register_of_legislation:C2010C00610:clause:7_8:p3
Version: federal_register_of_legislation:C2010C00610
Segment Type: clause
Provision Reference: sch 7 cl 8 (pt 3/3)
Character Range: 40831–42147

on the amended assessment; and
 (b) if subparagraph (3)(b)(ii) of this section applies—the reference in paragraph (1)(b) of that section to the *shareholders' ratio used previously were a reference to the revised shareholders' ratio that is based on the previous assessment.

Example: Continuing the example in subsection (2), the assessment of X Co for the 2002‑2003 income year is amended on 31 March 2004. Under the amended assessment, X Co's income tax liability would be $300,000 if the tax offset were disregarded.

Of that liability, $60,000 is attributable to the shareholders. That amount is reduced by the tax offset of $68,000 to nil.

X Co's liability to pay income tax is therefore reduced to $240,000 ($300,000 minus $60,000) and it will receive a refund of $92,000 ($332,000 minus $240,000). As the revised shareholders' ratio has become nil, no franking debit arises from the refund.

The franking credits that previously arose from the payments of PAYG instalments and income tax would not have arisen if the new revised shareholders' ratio had been used. Section 219‑55 (as applied by subsection (4) of this section) therefore operates to create an adjustment to cancel those franking credits. The adjustment is a franking debit of $12,000 that arises on the day of the amendment of the assessment.