Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p1
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 1/5)
Character Range: 6060627–6063477

4                                      The *subsidiary member's *exempting account does not operate during the period:
                                       (a) starting just after the joining time; and
                                       (b) ending when the entity ceases to be a subsidiary member of the group

Note 1: If the subsidiary's franking account is in deficit, it will be liable for franking deficit tax: see subsection 709‑60(3). This deficit may be increased by item 3 in the table in subsection (4).
Note 2: The subsidiary's franking account does not operate while it is a member of the group: see section 709‑65.
 (5) There is no change to the status of the *head company of a *consolidated group if:
 (a) the head company is a *former exempting entity; and
 (b) a *corporate tax entity becomes a *subsidiary member of the group; and
 (c) the entity is neither an *exempting entity nor a former exempting entity at the joining time.
Note 1: If the subsidiary's franking account is in surplus, that surplus will be transferred to the head company's franking account: see subsection 709‑60(2).
Note 2: If the subsidiary's franking account is in deficit, it will be liable for franking deficit tax: see subsection 709‑60(3).
Note 3: The subsidiary's franking account does not operate while it is a member of the group: see section 709‑65.

Subdivision 709‑C—Treatment of excess franking deficit tax offsets when entity becomes a subsidiary member of a consolidated group

Guide to Subdivision 709‑C

709‑180  What this Subdivision is about
      This Subdivision provides that any excess in the tax offset arising from a franking deficit tax liability of an entity that becomes a subsidiary member of a consolidated group is transferred to the head company of the group.

Table of sections
709‑185 Joining entity's excess franking deficit tax offsets transferred to head company
709‑190 Exit history rule not to treat leaving entity as having a franking deficit tax offset excess

709‑185  Joining entity's excess franking deficit tax offsets transferred to head company
 (1) This section operates if:
 (a) an entity (the joining entity) becomes a *subsidiary member of a *consolidated group at a time (the joining time); and
 (b) the joining entity is entitled to a *tax offset under section 205‑70 for the income year that ends or, if subsection 701‑30(3) applies, that is taken by subsection (3) of that section to end, at the joining time; and
 (c) an amount (the joining entity's excess) of the offset remains after applying section 63‑10 (about the tax offset priority rules) to the joining entity's basic income tax liability for that income year.

Transfer of excess to head company
 (2) For the purpose of applying subsection 205‑70(1) to the *head company of the *consolidated group for the income year in which the joining