Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p12
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 12/19)
Character Range: 3781526–3784266

the franking donor company as if:
 (a) it ceased to be a *franking entity at that time; and
 (b) its franking account had been in deficit to the same extent immediately before that cessation.
Note: Subsection 205‑45(3) makes an entity liable to pay franking deficit tax if the entity ceases to be a franking entity and had a franking deficit immediately before ceasing to be a franking entity.

NZ recipient company's franking account after conditions are met
 (5) If, apart from paragraph (a), a *franking credit or *franking debit would arise in the franking donor company's *franking account at a time (the accounting time) that is a time when all the conditions in subsection (1) are met but after the first time at which all those conditions are met in relation to the franking donor company:
 (a) the credit or debit does not arise in the franking donor company's franking account; and
 (b) a credit or debit of the same amount arises at the accounting time in the NZ recipient company's franking account instead.
 (6) However, subsection (5) does not apply in relation to:
 (a) a *franking debit arising in the franking donor company's *franking account under subsection (3); or
 (b) a *franking credit arising in that account because of item 5 of the table in section 205‑15 in conjunction with subsection (4) of this section; or
 (c) a franking debit arising in that account under paragraph 220‑605(3)(a).
Note 1: Item 5 of the table in section 205‑15 gives rise to a franking credit immediately after a liability to franking deficit tax arises. Subsection (4) of this section causes such a liability to arise under section 205‑45.
Note 2: Paragraph 220‑605(3)(a) gives rise to a franking debit if the NZ franking choice of a company that is a former exempting entity is revoked or cancelled and the company's exempting account is in deficit immediately before the revocation or cancellation.

Franking donor company's benchmark franking percentage
 (7) Subsection (5) does not affect the franking donor company's *benchmark franking percentage.

Special rules if franking donor company is former exempting entity
 (8) If the franking donor company becomes a *former exempting entity at the first time all the conditions in subsection (1) are met:
 (a) subsections (3) and (4) do not apply; and
 (b) subsection (5) does not apply in relation to:
 (i) a *franking credit arising in the franking donor company's *franking account under item 1 of the table in section 208‑130 immediately after that time; or
 (ii) a *franking debit arising in the franking donor company's franking account under item 1 of the table in section 208‑145 immediately after that time.
Note: Subsection (8) ensures that the franking donor company's franking