Document ID: chunk:federal_register_of_legislation:C2010C00690:clause:1_5:p6
Version: federal_register_of_legislation:C2010C00690
Segment Type: clause
Provision Reference: sch 1 cl 5 (pt 6/10)
Character Range: 161776–164622

709‑60 Nil balance franking account for joining entity

Treatment of subsidiary member's franking account

709‑65 Subsidiary member's franking account does not operate

Treatment of head company's franking account

709‑70 Credits arising in head company's franking account
709‑75 Debits arising in head company's franking account

Franking distributions by subsidiary member

709‑80 Subsidiary member's distributions on employee shares taken to be distributions by head company
709‑85 Non‑share distributions by subsidiary members taken to be distributions by head company

[This is the end of the Guide.]

Object

709‑55  Object of this Subdivision

  The object of this Subdivision is for each *consolidated group to operate what is in substance a single *franking account, by ensuring that:
 (a) there is a nil balance in the franking accounts of entities becoming *subsidiary members of the group; and
 (b) the franking accounts of those subsidiary members do not operate while they are subsidiary members; and
 (c) debits or credits that would otherwise arise in the franking accounts of the subsidiary members arise instead in the franking account of the *head company of the group; and
 (d) the head company is the only *member of the group that can frank distributions.

Treatment of franking accounts at joining time

709‑60  Nil balance franking account for joining entity

 (1) This section operates if an entity (the joining entity) becomes a *subsidiary member of a *consolidated group at a time (the joining time).

 (2) If the joining entity's *franking account is in surplus just before the joining time:
 (a) a debit equal to the *franking surplus arises at the joining time in the joining entity's franking account; and
 (b) a credit equal to the franking surplus arises at the joining time in the franking account of the *head company of the group.

 (3) If the joining entity's *franking account is in deficit just before the joining time:
 (a) a credit equal to the *franking deficit arises at the joining time in the joining entity's franking account; and
 (b) the joining entity is liable to pay *franking deficit tax as if the joining entity's income year had ended just before the joining time; and
 (c) despite item 6 of the table in section 160‑115, a credit does not arise under that item in the joining entity's franking account because of that liability.

Treatment of subsidiary member's franking account

709‑65  Subsidiary member's franking account does not operate

  The *franking account of an entity that is a *subsidiary member of a *consolidated group does not operate during the period:
 (a) beginning just after the entity becomes a subsidiary member of the group; and
 (b) ending when the entity ceases to be a subsidiary member of the group.

Treatment of head company's franking account

709‑70