Document ID: chunk:federal_register_of_legislation:C2025C00029:section:9:p1
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 9 (pt 1/3)
Character Range: 3471080–3473932

9                                the entity *pays Australian DMT tax; and                                                                                                                                                                        that part of the payment that is attributable to the period during which the entity was a franking entity                                                                on the day on which the payment is made
                                 the entity satisfies the *residency requirement for the income year corresponding to the *Fiscal Year for which the tax is paid; and
                                 the entity is a *franking entity for the whole or part of that income year

 (2) A *franking credit covered by item 4 of the table arises at the end of the income year:
 (a) that is an income year of the last partnership or trust interposed between:
 (i) the entity; and
 (ii) the *corporate tax entity that made the distribution; and
 (b) during which the *franked distribution *flows indirectly to the entity.
 (3) Despite item 1 or 2 of the table in subsection (1), no credit arises on that part of the payment that is attributable to a payment of income tax in relation to an *RSA component.
 (4) An entity's *franking credit for a payment mentioned in item 1 or 2 of the table in subsection (1) is reduced by the amount (if any) worked out as follows, but not below zero.

      Method statement
           Step 1. Identify any income years ending before the payment was made for which the entity has *received a refund of income tax.
           Step 2. Add up the part (if any) of each of those refunds that is attributable to a *tax offset that is subject to the refundable tax offset rules because of section 67‑30 (about R&D).
           Step 3. Subtract any reduction under this subsection of a *franking credit for any earlier payment by the entity. (For this purpose, assume a credit reduced to zero is still a franking credit.)
 (5) The proportion is the standard corporate tax rate (within the meaning of Part IVA of the Income Tax Assessment Act 1936) divided by 40%.

205‑20  Paying a PAYG instalment, income tax, diverted profits tax or Australian DMT tax
 (1) An entity pays a PAYG instalment if and only if:
 (a) the entity has a liability to pay the instalment; and
 (b) either:
 (i) the entity makes a payment to satisfy the liability (in whole or in part); or
 (ii) a credit, or an *RBA surplus, is applied to discharge or reduce the liability.
Note: The requirement in paragraph (a) means that the entity cannot generate franking credits by making a "voluntary" payment of income tax (that is, paying an amount on account of income tax for which the entity is not liable at the time when the payment is made).
 (2) If an entity:
 (a) is liable to pay a *PAYG instalment; and
 (b)