»Ê¹ÚÌåÓýapp

ICTA88/SCH13/PARA4

Where:

• a company has paid ACT in respect of franked payments made in a return period,

and

• receives franked investment income in a later return period but in the same accounting period,

it has to make a return for that later return period.

»Ê¹ÚÌåÓýapp return has to be made whether or not it made franked payments or paid any FID in that later return period.

»Ê¹ÚÌåÓýapp company is then due a repayment of ACT. »Ê¹ÚÌåÓýapp repayment is the smaller of:

• the ACT so far paid (and not repaid) in respect of franked payments made in that accounting period, and
• the amount of tax credit comprised in the excess (if any) of the franked investment income received over the franked payments made in that later return period.

»Ê¹ÚÌåÓýapp effect of this provision is that overall a company only accounts for the ACT due over the whole of the accounting period.

Example

A company has an accounting period to 31 March 1995. It pays out its one and only qualifying distribution in the return period to 31 December 1994. £10,000 ACT is paid to the Collector within the 14 days as required.

In its final return period to 31 March 1995, the company receives franked investment income. This includes a £3,000 tax credit. »Ê¹ÚÌåÓýapp company makes no distribution in that return period. »Ê¹ÚÌåÓýapp tax credit can be set against the earlier ACT payment allowing a £3,000 repayment.