Commonwealth Consolidated Acts

NEW BUSINESS TAX SYSTEM (IMPUTATION) ACT 2002 - SCHEDULE 4

Income Tax Assessment Act 1936

1 Subsection 160ATD(1)

After "franking accounts", insert "immediately after the event occurred".

Income Tax (Transitional Provisions) Act 1997

2 After Division 201

Insert:

Division 205—Franking accounts
205-1 Order of events provision

If a company has a franking account under Part IIIAA of the Income Tax Assessment Act 1936 (the old account ) at the end of 30 June 2002, the old account is closed off and an opening balance is created in the company's franking account under section 205-10 (the new account ) as follows:

(a)

any estimated debits in the old account at the end of 30 June 2002 are washed out of the account under section 205-5; and

(b)

if there is a franking surplus in the account at the end of 30 June 2002, it gives rise to a franking credit in the new account under section 205-10.

205-5 Washing estimated debits out of the franking account before conversion

If, under Part IIIAA of the Income Tax Assessment Act 1936 , the termination time in relation to an estimated debit of a company would, but for this section, occur after the end of 30 June 2002, it is taken to have occurred at the end of 30 June 2002.

Note: A franking credit of the appropriate class equal to the debit will arise under section 160APU of that Act at the beginning of 30 June 2002.

205-10 Converting franking surplus on 30 June 2002 into a franking credit on 1 July 2002—normal balancers

(1)

This section applies to companies that have a franking year that ends at the end of 30 June 2002 under Part IIIAA of the Income Tax Assessment Act 1936 (the 1936 Act ).

(2)

If the company has a franking surplus under Part IIIAA of the 1936 Act at the end of 30 June 2002:

(a)

no franking credit arises under section 160APL of that Act because of the surplus; and

(b)

a franking credit arises on 1 July 2002 in the franking account established under section 205-10 of the Income Tax Assessment Act 1997 (the 1997 Act ) for the company.

The amount of the franking credit is worked out under subsection (3).

(3)

The franking credit generated under paragraph (2)(b) from a franking surplus of a class specified in column 2 of the following table is worked out using the formula in column 3 of the table for that class.