Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p11
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 11/19)
Character Range: 3779065–3781760

the company was a former exempting entity and its exempting account was in deficit.

Franking accounts of NZ franking company and some of its 100% subsidiaries

220‑300  NZ franking company's franking account affected by franking accounts of some of its 100% subsidiaries
 (1) This section has effect if all these conditions are met in relation to a company (the franking donor company) at a time:
 (a) the franking donor company is at the time:
 (i) an Australian resident or a *post‑choice NZ franking company; and
 (ii) a *100% subsidiary of a post‑choice NZ franking company (the parent company) that is not a 100% subsidiary of another company that is a member of the same *wholly‑owned group as the parent company;
 (b) the franking donor company is at the time a 100% subsidiary of a post‑choice NZ franking company (the NZ recipient company) in relation to which these requirements are met:
 (i) there must be no companies that are *NZ residents and 100% subsidiaries of the NZ recipient company interposed between it and the franking donor company;
 (ii) the NZ recipient company must be either the parent company or a 100% subsidiary of the parent company;
 (c) there are interposed between the NZ recipient company and the franking donor company at the time one or more companies, each of which:
 (i) is a 100% subsidiary of the NZ recipient company; and
 (ii) is neither an Australian resident nor an NZ resident.

What is a post‑choice NZ franking company?
 (2) A company is a post‑choice NZ franking company at a time if:
 (a) at the time, the company is an *NZ franking company; and
 (b) the notice constituting the *NZ franking choice that makes the company an NZ franking company at the time was given to the Commissioner at or before the time.

Franking donor company's franking surplus when conditions met
 (3) If the franking donor company's *franking account is in *surplus at the first time all the conditions in subsection (1) are met:
 (a) a *franking debit equal to the surplus arises in the franking donor company's franking account immediately after that time; and
 (b) a *franking credit equal to the surplus arises in the NZ recipient company's franking account immediately after that time.

Franking donor company's franking deficit when conditions met
 (4) If the franking donor company's *franking account is in *deficit at the first time all the conditions in subsection (1) are met, subsection 205‑45(3) applies in relation to the franking donor company as if:
 (a) it ceased to be a *franking entity at that time; and
 (b) its franking account had been in deficit to the same extent immediately before that cessation.
Note: Subsection 205‑45(3) makes an entity