After "Then", insert ", subject to subsection (5) (which relates to a ^* private company's first year of tax liability),".

Add:

30% reduction will generally not apply to private company's first year of tax liability

(5)

The 30% reductions in steps 1 and 2 of the method statement in subsection (2) do not apply in working out the amount of the ^* tax offset to which the entity is entitled for the relevant year if:

(a) the entity is a ^* private company for the relevant year; and
(b) if the company did not have the tax offset (but had all its other tax offsets) it would have had an income tax liability for the relevant year; and
(c) the company has not had an income tax liability for any income year before the relevant year; and
(d) the amount of the liability referred to in paragraph (b) is at least 90% of the amount of the ^* deficit in the company's ^* franking account at the end of the relevant year.

The amendments made by this Schedule apply to assessments for the income year in which the amendments commence and later income years.