Commonwealth Consolidated Acts Commonwealth Consolidated Acts(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.