Income Tax Act 2007

Memorandum accounts - Imputation credit accounts (ICA)

OB 69: Further income tax paid satisfying liability for income tax

You could also call this:

"Paying extra income tax to cover what you owe"

You pay further income tax as an ICA company. You can choose to use this payment to satisfy your income tax or provisional tax liability. This liability must be for the income year when you are an ICA company. You can also choose to satisfy a group liability if you are part of a consolidated imputation group. The liability is treated as paid on the day you pay the further income tax. You can convert the payment into a tax loss if you are an Australian ICA company. The tax loss is calculated using a formula: further income tax paid divided by the tax rate. The tax rate is the basic rate of income tax set out in schedule 1, part A, clause 2. You can choose to attribute the tax loss to yourself or another company in the same group. The tax loss is for the income year when you paid the further income tax. You can only convert the payment into a tax loss if you cannot credit it against a future income tax liability. You can choose to satisfy your liability or a group liability when you pay further income tax.

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Topics:

Money and consumer rights > Taxes

OB 68: Income tax paid satisfying liability for further income tax, or

"Using income tax to pay off extra company tax"

OB 70: Application of other provisions, or

"How other tax laws apply to further income tax"

Part OMemorandum accounts
Imputation credit accounts (ICA)

OB 69Further income tax paid satisfying liability for income tax

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

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.
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.

Compare

2004 No 35 ss ME 9(5), (5B), ME 13(6)

Notes

Section OB 69(8)(b): amended, on 1 April 2008, 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 24 February 2016, by section 243 of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).