A company might have made a Section 242 claim on surplus franked
investment income using franked investment income of 1993-94.
Because of the restriction on the amount of tax credit paid for
1993-94 the surplus franked investment income so used was
calculated as if the tax credit comprised in it was calculated at a
rate of 1/4, (FA93/S78 (8)).
For identification of the surplus franked investment income,
see
CTM16215.
Franked investment income used in a Section 242 claim was
deducted from surplus franked investment income carried forward for
the purposes of ICTA88/S241 and ICTA88/SCH13, (ICTA88/S242 (1)(b)).
Because for 1993-94 franked investment income was generally
calculated with a tax credit at 9/31, but for Section 242 purposes
was calculated with a tax credit at 1/4, this would have left an
amount remaining which represented the difference between the tax
credit rates. To overcome this a further reduction was made from
the surplus franked investment income carried forward to represent
this difference, (FA93/S78 (9)).
