Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p2
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 2/13)
Character Range: 805182–807732

to the tax offset carry forward rules or the refundable tax offset rules; and
 (iii) it did not have any tax offset under section 205‑70;
  but had all its other tax offsets.
The excess is the amount of excess franking offsets.
Note: Division 65 sets out the tax offset carry forward rules. Division 67 sets out which tax offsets are subject to the refundable tax offset rules.
Example: For the 2017‑18 income year, Company E (which is not a base rate entity) has:
                  *   assessable income of $200 (franked distribution of $140 and franking credit of $60); and
                  *   $100 of deductions that are allowable.
 The tax offset of $60 from the franking credit is not stated in Division 67 to be subject to the refundable tax offset rules.
 Disregarding the tax offset of $60 from the franking credit, the amount of income tax that Company E would have to pay is $30:

 This amount is $30 less than the tax offset of $60. Company E therefore has an amount of excess franking offsets of $30 for that year.

How to work out the amount of the tax loss
 (2) For the purposes of this Act, if:
 (a) an entity has an amount of *excess franking offsets for an income year; and
 (b) the result of applying the following method statement is a positive amount;
then:
 (c) the entity is taken to have a *tax loss for that year equal to that positive amount (instead of an amount of tax loss worked out under section 36‑10, 165‑70, 175‑35 or 701‑30); and
 (d) that year is taken to be a *loss year for the entity if the entity would not otherwise have a tax loss for that year.

      Method statement
           Step 1. Work out the amount (if any) that would have been the entity's *tax loss for that year under section 36‑10, 165‑70, 175‑35 or 701‑30 if the entity's *net exempt income for that year (if any) were disregarded.
                  Note: See section 36‑20 for the calculation of net exempt income.
           Step 2. Divide the amount of *excess franking offsets by the entity's *corporate tax rate for imputation purposes for that year.
           Step 3. Add the results of steps 1 and 2.
           Step 4. Reduce the result of step 3 by the entity's *net exempt income for that year (if any).
            The result of this step is taken to be the entity's *tax loss for that year. However, if the result of this step is nil or a negative amount, the company does not have any tax loss for that year.
Example: Assume that company E did not derive any exempt income for the 2017‑2018 income year and that it would not