Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) Each entity that is, or has ever been, a corporate tax entity has a franking account.
(2) The payment of a PAYG instalment or income tax will generate a franking credit in that account. The amount of the credit is equal to the amount of tax paid. The receipt of a franked distribution by an entity from another corporate tax entity will also generate a franking credit. There are other circumstances in which a franking credit arises.
(3) The receipt of a refund of income tax or the payment of a franked distribution by a corporate tax entity will generate a franking debit. There are, however, other cases where a franking debit arises. For example, a franking debit might arise under a determination by the Commissioner because distributions have been streamed.
(4) An entity must be a franking entity at certain times and satisfy certain residency requirements before a franking credit or debit arises in its account.
(5) Franking deficit tax is payable if the franking account of an entity is in deficit at the end of the entity's income year, or when the entity ceases to be a franking entity.
(6) A tax offset is available to an entity that has incurred a liability to pay franking deficit tax.