Commonwealth Consolidated Acts Commonwealth Consolidated Acts(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.