Document ID: chunk:federal_register_of_legislation:C2004A00975:clause:1_1:p1
Version: federal_register_of_legislation:C2004A00975
Segment Type: clause
Provision Reference: sch 1 cl 1 (pt 1/20)
Character Range: 1619–4352

1  After Part 3‑5
Insert:

Part 3‑6—The imputation system

Division 200—Guide to Part 3‑6

Guide to Division 200

200‑1  What this Division is about

      This Division provides an overview of the imputation system.

Table of sections

200‑5 The imputation system
200‑10 Franking a distribution
200‑15 The franking account
200‑20 How a distribution is franked
200‑25 A corporate tax entity must not give its members credit for more tax than the entity has paid
200‑30 Benchmark rule
200‑35 Effect of receiving a franked distribution
200‑40 An Australian corporate tax entity can pass the benefit of having received a franked distribution on to its members
200‑45 Special rules for franking by some entities

200‑5  The imputation system

  The *imputation system partially integrates the income tax liabilities of an Australian corporate tax entity and its members by:
 (a) allowing the entity, when distributing profits to its members, to pass to those members credit for income tax paid by the entity on those profits; and
 (b) allowing the entity's Australian members to claim a tax offset for that credit; and
 (c) allowing the entity's Australian members to claim a refund if they are unable to fully utilise the tax offset in reducing their income tax.

200‑10  Franking a distribution

  When an Australian corporate tax entity distributes profits to its members, the entity has the option of passing to those members credit for income tax paid by the entity on the profits. This is done by franking the distribution.

200‑15  The franking account

 (1) A franking account is used to keep track of income tax paid by the entity, so that the entity can pass to its members the benefit of having paid that tax when a distribution is made.

 (2) Each corporate tax entity has a franking account.

 (3) Typically, a corporate tax entity receives a credit in the account if the entity pays income tax or receives a franked distribution. A credit in the franking account is called a franking credit.

 (4) Typically, a corporate tax entity receives a debit in the account if the entity receives a refund of tax or franks a distribution to its members. A debit in the franking account is called a franking debit.

200‑20  How a distribution is franked

 (1) A corporate tax entity franks a distribution by allocating a franking credit to it.

 (2) The amount of the franking credit on the distribution is the amount specified in a statement that accompanies the distribution.

 (3) Only some kinds of distribution can be franked. These are called frankable distributions.

200‑25  A corporate tax entity must not give its members credit for more tax than the entity has paid

 (1) A corporate tax entity must not frank a