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INCOME TAX ASSESSMENT ACT 1997 - SECT 208.145

Franking debits arising because of status as exempting entity or former exempting entity

                         The following table sets out when a debit arises in the * franking account of an entity because of its status as an * exempting entity or * former exempting entity.

 

Franking debits arising because of status as an exempting entity or former exempting entity

Item

If:

A debit of:

Arises:

1

an entity becomes a * former exempting entity; and

the entity has a * franking surplus at the time it becomes a former exempting entity

the amount of the franking surplus

immediately after the entity becomes a former exempting entity

2

the * exempting account of a * former exempting entity would, apart from item 7 of the table in section 208- 115, be in * deficit immediately before the end of an income year

an amount equal to the deficit

immediately before the end of the income year

3

an * exempting credit arises in the * exempting account of the entity under item 5, 6 or 9 of the table in section 208- 115

an amount equal to the exempting credit

when the exempting credit arises

4

a * former exempting entity becomes an * exempting entity; and

the entity has an * exempting deficit at the time it becomes an * exempting entity

an amount equal to the exempting deficit

immediately after it becomes an exempting entity

5

a * franking credit arises in the * franking account of an entity under item 3 or 4 of the table in section 205-15 because a * distribution is made by an * exempting entity to the entity, or a distribution made by an exempting entity * flows indirectly to the entity

an amount equal to the amount of the franking credit

when the franking credit arises

Note 1:       Item 3 of the table is designed to reverse out franking credits that arise in relation to a period during which the entity is an exempting entity. The entity will receive an exempting credit instead.

Note 2:       Item 5 of the table is designed to reverse out franking credits that arise under the core rules because an entity receives a franked distribution from an exempting entity. Only a recipient who is itself an exempting entity is entitled to a franking credit in these circumstances.



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