Document ID: chunk:federal_register_of_legislation:C2025C00029:section:14:p5
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 14 (pt 5/14)
Character Range: 3501402–3504021

to pay *franking deficit tax in the relevant year;
 (b) the assessment of the entity's *income tax liability for the relevant year that is made on the *assessment day for that year.

30% reduction will generally not apply to private company's first year of tax liability
 (5) The 30% reductions in steps 1 and 2 of the method statement in subsection (2) do not apply in working out the amount of the *tax offset to which the entity is entitled for the relevant year if:
 (a) the entity is a *private company for the relevant year; and
 (b) if the company did not have the tax offset (but had all its other tax offsets) it would have had an *income tax liability for the relevant year; and
 (c) the company has not had an income tax liability for any income year before the relevant year; and
 (d) the amount of the liability referred to in paragraph (b) is at least 90% of the amount of the *deficit in the company's *franking account at the end of the relevant year.

Commissioner's discretion
 (6) The 30% reductions in steps 1 and 2 of the method statement in subsection (2) do not apply in working out the amount of the *tax offset to which the entity is entitled for the relevant year if the Commissioner determines in writing, on application by the entity in the *approved form, that the excess referred to in those steps was due to events outside the control of the entity.
 (7) A determination under subsection (6) is not a legislative instrument.

Applicable franking debits
 (8) This subsection applies to *franking debits in the *franking account of an entity:
 (a) that arise under table item 1, 3, 5 or 6 in section 205‑30 for an income year; and
 (b) if the entity has franking debits covered by paragraph (a) for that income year—that arise under table item 2 in that section for that income year.

Division 207—Effect of receiving a franked distribution

Table of Subdivisions
 Guide to Division 207
207‑A Effect of receiving a franked distribution generally
207‑B Franked distribution received through certain partnerships and trustees
207‑C Residency requirements for the general rule
207‑D No gross‑up or tax offset where distribution would not be taxed
207‑E Exceptions to the rules in Subdivision 207‑D
207‑F No gross‑up or tax offset where the imputation system has been manipulated

Guide to Division 207

Table of sections
207‑5 Overview

207‑5  Overview
 (1) If a corporate tax entity makes a franked distribution to one of its members, then, as a general rule:
 (a) an amount equal to the franking credit on the distribution is included in the member's assessable income; and
 (b) the member