Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 220.215

  (1)   This section has effect if:

  (a)   a company has made an * NZ franking choice; and

  (b)   the choice is revoked or cancelled at a time (the end time ); and

  (c)   immediately before the end time the company is a foreign resident.

Franking debit if franking surplus just before end time

  (2)   A * franking debit arises in the company's * franking account on the day during which the end time occurs if the account was in * surplus immediately before that time. The amount of the debit equals the * franking surplus.

Franking deficit tax if franking deficit just before end time

  (3)   If the company's * franking account was in * deficit immediately before the end time, subsection   205 - 45(3) applies in relation to the company as if it ceased to be a * franking entity at the end time.

Note:   Subsection   205 - 45(3) makes an entity liable to pay franking deficit tax if the entity ceases to be a franking entity and had a franking deficit immediately before ceasing to be a franking entity.

  (4)   Subsection   (3) does not limit the effect of subsection   205 - 45(3).

Take account of franking debit arising under section   220 - 605

  (5)   Take account of any * franking debit arising under section   220 - 605 because of the revocation or cancellation in working out for the purposes of this section whether the company's * franking account is in * surplus or * deficit immediately before the end time.

Note:   Section   220 - 605 provides for a franking debit to arise in the company's franking account immediately before the end time if, immediately before the end time, the company was a former exempting entity and its exempting account was in deficit.