INCOME TAX ASSESSMENT ACT 1997 - SECT 197.65 Choosing to untaint--further franking debits may arise

INCOME TAX ASSESSMENT ACT 1997 - SECT 197.65

When this section applies

  (1)   This section applies if:

  (a)   a company chooses to untaint its * share capital account; and

  (b)   the applicable franking percentage (within the meaning of subsection   (3)) is higher than the percentage that was the * benchmark franking percentage in relation to the * franking period in which the transfer of an amount (the transferred amount ) that is, or is part of, the * tainting amount occurred.

Note:   If paragraph   (b) is satisfied in relation to 2 or more amounts, this section is to be applied separately in relation to each of those amounts (so a separate franking debit will arise in relation to each of those amounts).

Franking debit arises in relation to making the choice

  (2)   A * franking debit arises in the company's * franking account in relation to the transferred amount. The debit arises immediately before the end of the * franking period in which the choice to untaint is made.

  (3)   The amount of the * franking debit is the amount by which the amount calculated in accordance with the following formula exceeds the amount of the franking debit that arose under section   197 - 45 in relation to the transferred amount:

where:

"applicable franking percentage" means:

  (a)   if, before the debit arises, the * benchmark franking percentage for the * franking period in which the choice to untaint is made has already been set by section   203 - 30--that percentage; or

  (b)   otherwise--100%.

"applicable gross-up rate" means the company's * corporate tax gross - up rate for the income year in which the franking debit arises.