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Thursday, 2 April 1987
Page: 1948

Mr KEATING (Treasurer)(11.39) —I move:

That the Bill be now read a second time.

The Income Tax (Franking Deficit) Bill 1987 which I have just introduced will amend the income tax law for the introduction of the full imputation system of company taxation. As I explained in the context of that Bill, where a company has a franking deficit at the end of a year it will be required to pay franking deficit tax in order to make good the shortfall in company tax imputed to its shareholders.

The purpose of this Bill is to impose formally on such a company liability to pay franking deficit tax. Franking deficit tax imposed by this Bill will be offset against company tax on income of the 1986-87 income year or any later year which becomes due under an assessment or amended assessment raised after the end of the year in which the deficit arises. The franking deficit tax is not a penalty. It is simply a payment which will be required to make up any amount of company tax that has been imputed to shareholders by the payment of franked dividends beyond what has actually become available by the end of that year. I commend the Bill to the House.

Debate (on motion by Mr Carlton) adjourned.