Document ID: chunk:federal_register_of_legislation:C2025C00029:section:14:p3
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 14 (pt 3/14)
Character Range: 3496630–3499163

section is to ensure that an entity does not avoid *franking deficit tax by deferring the time at which a *franking debit occurs in its *franking account.

End of year deficit deferred
 (2) An entity is taken to have *received a refund of income tax for an income year immediately before the end of that year for the purposes of subsection 205‑45(2) if:
 (a) the refund is paid within 3 months after the end of that year; and
 (b) the *franking account of the entity would have been in *deficit, or in deficit to a greater extent, at the end of that year if the refund had been received in that year.

Deficit on ceasing to be a franking entity deferred
 (3) If an entity ceases to be a *franking entity during an income year, the entity is taken to have *received a refund of income tax immediately before it ceased to be a franking entity for the purposes of subsection 205‑45(3) if:
 (a) the refund is attributable to a period in the year during which the entity was a franking entity; and
 (b) the refund is paid within 3 months after the entity ceases to be a franking entity; and
 (c) the *franking account of the entity would have been in *deficit, or in deficit to a greater extent, immediately before it ceased to be a franking entity if the refund had been received before it ceased to be a franking entity.

205‑70  Tax offset arising from franking deficit tax liabilities

When does the tax offset arise?
 (1) A *corporate tax entity is entitled to a *tax offset for an income year for which it satisfies the *residency requirement (the relevant year) if at least one of the following applies:
 (a) the entity has incurred a liability to pay *franking deficit tax in the relevant year;
 (b) the entity incurred such a liability in a previous income year for which it did not satisfy the residency requirement, and that liability has not been taken into account in working out a tax offset under this section;
 (c) when the entity was last entitled to a tax offset under this section for a previous income year, some of the offset remained after applying section 63‑10 (tax offset priority rules).

The amount of the tax offset
 (2) Work out the amount of the *tax offset for the relevant year as follows:

      Method statement
           Step 1. Work out the total amount of *franking deficit tax that is covered by paragraph (1)(a).
            Then, subject to subsections (5) and (6), reduce so much of it as is attributable to *franking debits to which subsection (8) applies by 30% if that part exceeds 10% of the