Document ID: chunk:federal_register_of_legislation:C2010C00610:clause:7_10:p1
Version: federal_register_of_legislation:C2010C00610
Segment Type: clause
Provision Reference: sch 7 cl 10 (pt 1/4)
Character Range: 42478–45223

10  At the end of Division 205
Add:

[The next section is section 205‑70.]

205‑70  Tax offset arising from franking deficit tax liabilities

General application rule

 (1) Section 205‑70 of the Income Tax Assessment Act 1997 has effect in relation to a corporate tax entity's assessments for the 2002‑2003 income year and later income years, except as provided in the following subsections.

Late balancing entities—2001‑2002 income year

 (2) If a corporate tax entity's 2001‑2002 income year ends after 30 June 2002, section 205‑70 of the Income Tax Assessment Act 1997 has effect in relation to the entity's assessment for that income year as if the following method statement had replaced the method statement in that section.

      Method statement
           Step 1. Work out the total amount of *franking deficit tax that is covered by paragraph (1)(a).
           Step 2. Add to the step 1 result the excess that is covered by paragraph (1)(c).
            The result is the *tax offset to which the entity is entitled under this section for the relevant year.

Late balancing entities—2002‑2003 income year

 (3) If:
 (a) a corporate tax entity's 2002‑2003 income year ends after 30 June 2003; and
 (b) the entity makes a valid election under section 205‑20 in that income year;
section 205‑70 of the Income Tax Assessment Act 1997 has effect in relation to the entity's assessment for that income year as if the following method statement had replaced the method statement in that section.

      Method statement
           Step 1. Work out the total amount of *franking deficit tax that is covered by paragraph (1)(a) and was incurred before 30 June 2003.
           Step 2. Work out the total amount of *franking deficit tax that is covered by paragraph (1)(a) and was incurred on 30 June 2003.
            Then reduce it by 30% if it exceeds 10% of the total amount of *franking credits that arose in the entity's *franking account during the period of 12 months immediately preceding that date.
           Step 3. Work out the total amount of *franking deficit tax that is covered by paragraph (1)(a) and was incurred after 30 June 2003.
            Then reduce it by 30% if it exceeds 10% of the total amount of *franking credits that arose in the entity's *franking account after that date and before the end of the last day on which the entity incurred a franking deficit tax liability in the relevant year.
           Step 4. Work out the total amount of *franking deficit tax that is covered by paragraph (1)(b) and was incurred in the 2001‑2002 income year.
           Step 5. Work out the excess that is covered by paragraph (1)(c).
           Step 6. Add up the results of steps 1, 2, 3, 4 and 5. The result is the