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OB 68: Income tax paid satisfying liability for further income tax
or “Using income tax to pay off extra company tax”
You could also call this:

“Using extra tax paid to cover income tax or provisional tax bills”

If you have a company that uses an imputation credit account (ICA), you can choose to use any further income tax you pay to cover your income tax or provisional tax bill. This applies to tax years when your company is an ICA company.

If your company is part of a consolidated imputation group, you can use this payment to cover the group’s income tax or provisional tax bill that comes up at the time of payment or later.

The day you pay the further income tax is counted as the day you paid your income tax or provisional tax bill.

If you have an Australian ICA company, you might be able to turn your further income tax payment into a tax loss. You can only do this if there’s no way the further income tax can be used against future income tax bills. To work out how much tax loss you get, you divide the amount of further income tax paid by the basic tax rate.

You can choose to give this tax loss to your company or to another company in the same wholly-owned group. This tax loss applies to the income year that matches the tax year when you paid the further income tax.

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Next up: OB 70: Application of other provisions

or “How other tax laws apply to further income tax”
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Part O Memorandum accounts
Imputation credit accounts (ICA)

OB 69Further income tax paid satisfying liability for income tax

  1. An ICA company that pays further income tax may choose to treat the payment as satisfying a liability of the company to pay income tax or provisional tax.

  2. The liability for income tax or provisional tax referred to in subsection (1) must be for an income year corresponding to a tax year in which the company is an ICA company.

  3. A company that is part of a consolidated imputation group may choose that the payment under subsection (1) satisfies a group liability for income tax or provisional tax that arises at or after the time of payment.

  4. The liability for income tax or provisional tax is treated as paid on the day on which the further income tax is paid.

  5. An Australian ICA company may choose to convert a payment of further income tax into a tax loss of an amount calculated under subsection (7). Subsection (6) overrides this subsection.

  6. The election under subsection (5) may be made only if no possibility exists that the further income tax can be credited against a future income tax liability of the company.

  7. For the purposes of subsection (5), the amount of the tax loss for the payment of further income tax is calculated using the formula—

    further income tax paid ÷ tax rate.

    Where:

    • In the formula,—

    • further income tax paid is the amount of further income tax paid that is not credited against an income tax liability:
      1. tax rate is the basic rate of income tax set out in schedule 1, part A, clause 2 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits) at the time the further income tax is paid.

        1. For the purposes of subsection (5), the company may choose that the tax loss is attributed to itself or to another company that is part of the same wholly-owned group of companies.

        2. The tax loss referred to in subsection (5) is a loss for the income year corresponding to the tax year in which the company paid the further income tax.

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        Notes
        • Section OB 69(8)(b): amended, on , by section 562 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
        • Section OB 69 list of defined terms basic rate: repealed, on , by section 243 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).