Document ID: chunk:federal_register_of_legislation:C2010C00610:clause:7_8:p2
Version: federal_register_of_legislation:C2010C00610
Segment Type: clause
Provision Reference: sch 7 cl 8 (pt 2/3)
Character Range: 38273–41093

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 the remainder (if any) of the part of the amount mentioned in paragraph 219‑70(1)(b) after the *tax offset is applied to reduce that part.
                  Note: The part mentioned in paragraph 219‑70(1)(b) is the part of an amount of the company's income tax liability for the income year that is attributable to its shareholders.
           Step 2. Divide the step 1 result by the company's total income tax liability for the income year (after applying the *tax offset).
            The result (which can be nil) is the company's revised shareholders' ratio for the income year.
Example: For the 2002‑2003 income year X Co (which is a life insurance company) has a tax offset of $68,000 under section 205‑70. Its income tax liability for that year would have been $400,000 on the assessment day (1 February 2004) if the tax offset were disregarded. Of that liability, $80,000 is attributable to the shareholders. The step 1 result is therefore $12,000 ($80,000 minus $68,000).

X Co's income tax liability after applying the tax offset is $332,000 ($400,000 minus $68,000). The revised shareholders' ratio is therefore 3/83 ($12,000 divided by $332,000).

For that income year, the company paid $249,000 of PAYG instalments before the assessment day and $83,000 of income tax one month after that day.

On the assessment day, a franking credit of $9,000 arises under item 2 of the table in section 219‑15 ($249,000 multiplied by 3/83). On the day the additional amount of tax is paid, another franking credit of $3,000 arises under item 4 of that table ($83,000 multiplied by 3/83).

Adjustment resulting from amended assessment—modification of section 219‑55

 (3) Subsection (4) applies to a *life insurance company if:
 (a) the assessment of the company's income tax liability for an income year (the previous assessment) is amended; and
 (b) at least one of the following applies:
 (i) a *tax offset under section 205‑70 is applied in making that amended assessment;
 (ii) a tax offset under section 205‑70 was applied in making the previous assessment.

 (4) Section 219‑55 has effect in relation to the company as if:
 (a) if subparagraph (3)(b)(i) of this section applies—a reference in that section to the new ratio were a reference to the revised shareholders' ratio that is based 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