INCOME TAX ASSESSMENT ACT 1997 - SECT 219.55 Adjustment resulting from an amended assessment

INCOME TAX ASSESSMENT ACT 1997 - SECT 219.55

  (1)   This section applies in relation to the * franking account of a * life insurance company if:

  (a)   the assessment of the company's * income tax liability for an income year is amended on a particular day (the adjustment day ); and

  (b)   the * shareholders' ratio (the new ratio ) based on the amended assessment is different from the shareholders' ratio used previously in relation to that income year to work out a * franking credit or * franking debit for the company; and

  (c)   the franking account would have a different balance on the adjustment day if the new ratio had been used to work out all the franking credits and franking debits covered by paragraph   (b).

Note:   The operation of this section is affected by section   219 - 75 if a tax offset under section   205 - 70 is, or has been, applied to work out the company's income tax liability.

  (2)   On the adjustment day, a * franking credit or * franking debit (as appropriate) of the amount worked out under subsection   (3) arises in the * franking account.

  (3)   The amount is an adjustment that will bring the * franking account to the balance that it would have on the adjustment day if the new ratio had been used to work out all the * franking credits and * franking debits covered by paragraph   (1)(b).

Example:   On the basis of a shareholders' ratio of 60% for the income year, franking credits of the amounts of $6,000, $6,000, $6,000 and $6,000 arose under item   2 of the table in section   219 - 15 for Company X.

  An amended assessment results in a new shareholders' ratio of 70%. Under this section, a franking credit of $4,000 arises on the day of the amended assessment to bring the balance of the franking account from $24,000 to $28,000, which would be the account's balance if the new shareholders' ratio had been used.