Question

A deficit in the franking account at year end cannot be carried forward to the next year's franking account.

true or false

Answer 1

The franking account is separate account for tax purposes that all coporate entities paying taxes needs to keep and is separate from entity financial accounts. Franking account keeps records of franking credits and franking debits. Franking credit occurs when corporate tax entity pays taxes while franking debit occurs when corporate tax entity receives refunds of income tax it has paid. At the end of year if an entity have deficient in its franking account then it is liable to pay franking deficient tax. Therefore, the statement that a deficient in a franking account cannot be carry forward to next year is true.