Company tax and franking checks

Ryan Duguid is not a registered tax agent or BAS agent. Project support is limited to software issues reproduced with fabricated data. Do not send taxpayer information or request advice, return preparation, tax-treatment confirmation, or lodgement.

Project name The Exchequer Tally. Distribution the-exchequer-tally, import package edwinnixon, command the-exchequer-tally.

Corporate tax rate verification, franking account ledger tracking, and Division 203 benchmark rule compliance for Australian private and public companies.

Package lifecycle: published. Install the-exchequer-tally from PyPI.

The australian-accounting repository contains the maintained source. The the-exchequer-tally distribution and command match the project identity. The edwinnixon import package remains unchanged, so internal Python imports do not need a rename.

In-repo version: 0.1.7; see release notes.

What it checks

• Base Rate Entity (BRE) Testing: Deterministic assessment under s 23AA & s 23AB Income Tax Rates Act 1986 (evaluating aggregated turnover thresholds and Base Rate Entity Passive Income ratios).
• Franking Account Ledger (FAB): Tracks PAYG instalments, company tax payments, dividends paid/received, ordinary income tax refunds, under-franking debits and FDT liability credits.
• Franking Deficit Tax (FDT) & Offset Reduction: Evaluates FDT liability under s 205-45 and the offset reduction under s 205-70(2) and (8) for the supported debit types. Refund-only deficits receive no reduction.
• Division 203 Benchmark Rule Engine: Detects over-franking tax (s 203-50(1)) and franking debit shortfalls (s 203-50(2)) across distributions in a franking period.
• Dividend Distribution Statements: Builds the statement fields required by s 202-75 / s 202-80. This is a review helper, not a lodgement and not a compliance certificate.

Not advice

Nothing this engine produces is tax, legal or financial advice, an assessment or a determination. Outputs are review aids: confirm every rate, threshold and consequence against the current law and the entity's facts before acting, and leave lodgement decisions with a registered practitioner.

Full boundary statement: DISCLAIMER.md.

Quickstart

Installation

pip install the-exchequer-tally

CLI usage

# Evaluate Base Rate Entity (BRE) status for FY2025
the-exchequer-tally bre-test --fy 2025 --turnover 4500000 --assessable 800000 --passive 120000

# Generate a dividend distribution statement
the-exchequer-tally dist-statement --entity "Acme Pty Ltd" --acn "123456789" --recipient "Jane Doe" --payment-date 2025-03-14 --amount 15000 --franking-pct 100 --tax-rate 0.25

Statutory sources and tests

Worked example: 2 income years, 2 rates

These fabricated figures are independently prepared inputs for an ordinary company. Aggregated turnover is a separate tax measure; do not substitute total assessable income for it.

from decimal import Decimal
from edwinnixon.corporate_tax import (
    BaseRateEntityTest,
    determine_corporate_tax_rate,
    determine_max_franking_rate,
)

prior = BaseRateEntityTest(2026, Decimal("2000000"), Decimal("1000000"), Decimal("900000"))
current = BaseRateEntityTest(2027, Decimal("3000000"), Decimal("1000000"), Decimal("200000"))
assert determine_corporate_tax_rate(current).applicable_rate == Decimal("0.25")
assert determine_max_franking_rate(2027, prior) == Decimal("0.30")

The company tax calculation uses FY2027 facts. The imputation calculation uses FY2026 amounts with the FY2027 rate scale. Passing current as the prior-year evidence now raises ValueError, as does using an older or future year.

The Library's Tax Examples / Companies and distributions, paragraph 10-000, prompted this case. Its text and example data are not reproduced. Authority: Income Tax Rates Act 1986 ss 23 and 23AA, and Income Tax Assessment Act 1997 s 995-1, definition of corporate tax rate for imputation purposes. The Rates Act and ITAA dictionary compilations dated 1 July 2026 were checked on 10 September 2026 against this FY2027 scenario and the existing rate table. Verify the applicable version for any actual distribution.

Newly formed entities without a prior income year need separate review; this helper still requires prior-year evidence and does not implement that statutory exception. This test proves arithmetic and period validation, not the supplied income classifications or a dividend's approval.

BaseRateEntityTest rejects passive income greater than assessable income, including a positive passive amount against nil assessable income. Both amounts may be zero, and passive income may equal assessable income.

With no assessable income the s 23AB passive-income test has no proportion to compare, so is_brepi_eligible and is_base_rate_entity are None and determine_corporate_tax_rate raises rather than returning the base rate. Failing the turnover test still settles the status on its own, because both limbs of s 23AA must be met. A financial year the rate table and the turnover-threshold table do not list is refused; neither table is read forward into an unlisted year.

Facts the engine will not assume

The entity's corporate tax rate is a required input everywhere it is used: BenchmarkRuleValidator(corporate_tax_rate=...), generate_distribution_statement(..., corporate_tax_rate=...) and the CLI's --tax-rate. None of them fall back to the 25% base rate, because scoring a 30% company at the base rate understates the s 202-60 maximum credit and makes fully franked distributions read as under-franked. A DistributionEvent may still leave its own rate unstated for add_distribution to fill from the validator; measured on its own it raises instead.

validate_distributions() returns (True, []) when the benchmark rule is met, (False, violations) when it is breached, and (None, []) when the period holds no frankable distribution, so no benchmark was set and nothing was tested. None is not a finding of compliance.

Refund classification and the FDT offset

record_tax_refund now requires the keyword includes_r_and_d_offset. Existing callers must confirm the refund's classification and pass False for an ordinary income tax refund. True or an unknown classification raises an error before posting. Descriptions do not determine tax treatment.

This fabricated FY2027 example has only an ordinary refund debit:

from datetime import date
from decimal import Decimal
from edwinnixon.franking_account import FrankingAccount

account = FrankingAccount(2027, opening_balance=Decimal("0.00"))
account.record_payg_instalment(date(2026, 9, 1), Decimal("1000"))
account.record_tax_refund(
    date(2027, 3, 1), Decimal("3000"), includes_r_and_d_offset=False,
)
result = account.evaluate_franking_deficit()
assert result.franking_deficit_tax == Decimal("2000")
assert result.allowable_tax_offset == Decimal("2000")
assert result.fdt_offset_reduction_applies is False

For supported debits, an item 1 distribution or item 3 under-franking debit also brings item 2 refunds into the reduction calculation. The threshold uses credits arising during the year, excluding the opening credit balance.

The evaluator assumes residency and no first-year exception or Commissioner's discretion. Other debit types, late-balancing rules and prior-year offset carry-forwards need separate review. The account accepts entries from 1 July to 30 June of its financial year, inclusive. Recording and construction reject out-of-year dates; balance calculations also reject entries inserted directly into the public list. Bring earlier periods forward through the opening balance.

The opening balance is a required fact. Left unstated it is None, and then closing_balance is None and evaluate_franking_deficit returns an explicit unknown: has_deficit is None, no FDT amount, and unknown_reason naming the missing balance. A None result is not a finding of no deficit. State the opening balance from the prior year's reconciled account, Decimal("0.00") included, to get a result.

R&D refunds need separate review in full, including mixed refunds. The R&D portion does not create an immediate debit under s 205-30(2); s 205-15(4) can reduce later payment credits. This ledger does not track that history. Do not use it for an account with outstanding deferred R&D debits, or bypass the refund guard by constructing entries directly.

The Library's Tax Examples / Companies and distributions prompted these cases. No source text or example figures are reproduced. Checked against ITAA 1997 ss 205-15, 205-30 and 205-70 on 10 September 2026.

All mathematical operations execute via decimal.Decimal fixed-point arithmetic to guarantee zero floating-point drift across corporate tax and franking schedules.

Automated test suite

• Run the full suite: uv run --locked --extra dev pytest (or pip install .[dev] then pytest; the configured coverage add-on needs the dev extras)
• The suite covers BRE eligibility, FDT penalty triggers, benchmark-rule checks, and distribution-statement generation. Do not treat a static badge as live coverage.

Licence

MIT License. Created by Ryan Duguid.