With the permission of the Chair, I propose to take amendments Nos. 7 and 8 together.
I move amendment No. 7:
In page 30, in subsection (5), line 52, after "Case IV of Schedule D " to insert the following:
" for the year of assessment in which the subsequent accounting period ends on an amount the income tax on which at the standard rate for the said year of assessment is equal to the amount of the said tax credit and this assessment shall be".
They are both drafting amendments. The company may claim under this section to have its franked investment income treated as if it were profits for certain purposes, for example, a set-off of trading losses. If having obtained payment of a tax credit in this way, it subsequently claims to have the amount so allowed carried forward for the subsequent accounting period instead of set-off against franked investment income, it is provided in this section that the tax credit paid be "clawed-back" by means of an assessment under Case IV of Schedule D.
The purpose of the first amendment is to clarify the form which such an assessment must take. It must be for the year of assessment in which that subsequent accounting period ends and must be of an amount which, when charged at the standard rate, produces an amount equal to the tax credit.
The second amendment is designed to ensure that an amount included in such an assessment is not treated as income for any other purpose. We circulated examples of the operation of section 25.
