Document ID: chunk:federal_register_of_legislation:C2010C00610:clause:7_8:p1
Version: federal_register_of_legislation:C2010C00610
Segment Type: clause
Provision Reference: sch 7 cl 8 (pt 1/3)
Character Range: 35833–38535

8  At the end of Division 219
Add:

219‑70  Tax offset under section 205‑70

 (1) In applying section 205‑70 to a *life insurance company, that section has effect as if:
 (a) the reference in paragraph 205‑70(1)(c) to the amount that would have been an entity's income tax liability for a previous income year were a reference to the part of such an amount in respect of the company that is attributable to its shareholders; and
 (b) the reference in subsection 205‑70(3) to the amount that would have been an entity's income tax liability for the relevant year were a reference to the part of such an amount in respect of the company that is attributable to its shareholders.

 (2) In working out the part of an amount that is attributable to the company's shareholders for the purposes of this section, regard is to be had to the accounting records of the company.

Example: The following apply to a life insurance company that satisfies the residency requirement for an income year:
  *   the company has a tax offset of $60,000 under section 205‑70 (the franking deficit offset) for that year;
  *   the company's income tax liability for that year would be $100,000 if the franking deficit offset were disregarded;
  *   20% of the $100,000 is attributable to the company's shareholders (the shareholders' part).

 As a result of applying $20,000 of the franking deficit offset to reduce the shareholders' part to nil, the company's income tax liability becomes $80,000. The remaining $40,000 of the offset will be included in a franking deficit tax offset for the next income year for which the company satisfies the residency requirement.

219‑75  Working out franking credits and franking debits where a tax offset under section 205‑70 is applied

Revised shareholders' ratio—modification of section 219‑50

 (1) Subsection (2) applies to a *life insurance company if a *tax offset under section 205‑70 is applied to work out the company's income tax liability for an income year.

Note: This means subsection (2) applies if the tax offset is applied to reduce the part of the amount mentioned in paragraph 219‑70(1)(b) in relation to the income year.

 (2) For the purposes of working out the amount of a *franking credit or *franking debit for the company in relation to the income year (other than a franking credit covered by item 1 of the table in section 219‑15), section 219‑50 has effect as if:
 (a) steps 1 and 2 of the method statement in section 219‑50 were omitted; and
 (b) the reference in step 3 of that method statement to the *shareholders' ratio were a reference to the revised shareholders' ratio worked out as follows:

      Method statement
           Step 1. Work out