Consolidation minutes, June 2008

2. Update on action items discussed at June 2007 meeting

Action item

1/28 June07 (tax sharing agreements and the clear exit provisions). Mark Kelly, Operations (Policy and New Measures) addressed this item. As previously advised, the Tax Office proposes to deal with other concerns regarding the calculation of clear exit payments in various scenarios and the 'reasonable estimate' requirement under section 721-35 in an expansion of Chapter 35 of Law Administration Practice Statement PS LA 2006/11 ATO Receivables Policy. This chapter is still in the process of being updated. Members were invited at the last meeting to suggest solutions to the single/multiple liability issue. One submission has been received. Members' concerns have been referred to Treasury.

Action item

From agenda item 5/28June07 (Subdivision 705-C for non-consolidated groups). (NTLG Consolidation Sub-group issue 17.08) Lindsay Hanham, Consolidation Centre of Expertise, addressed this issue. This ruling topic has been withdrawn from the Public Rulings Program and will be considered as part of ongoing discussions between the Tax Office and Treasury in relation to the consolidation regime. Members were invited at the last meeting to provide examples/scenarios where they think Subdivision 705-C should apply. No examples have been received.

Action item

2/28Jun07 (intra-group assets and the exit history rule). The issue of intra-group assets and the exit history rule was addressed at agenda item 3.

Action item

5/28Jun07 (trusts joining and leaving a consolidated group during an income year). Consolidation reference manual material is being considered.

Action item

From agenda item 13/28June07 (straddle contracts). (NTLG Consolidation Sub-group issue 14.01a) Sandra Peacock, Tax Counsel Network addressed this item. A number of Draft Tax Determinations have been developed and limited consultation with members has occurred. The Draft Tax Determinations are to be released shortly. Note: Draft Tax Determinations TD 2008/D9, TD 2008/D10 and TD 2008/D11 issued on 25 June 2008. On 3 July 2008 a technical discussion paper entitled was released on the Tax Office website.

Sections within Agenda items

• 1. Introduction
• 2. Update on action items discussed at June 2007 meeting
• 3. Intra-group asset and third party issues (NTLG Sub-group issue 17.10)
• 4. Foreign hybrids
• 5. Trade debts and potential double taxation (ATO ID 2005/211)
• 6. The implications for consolidations of the view expressed in the recently released Draft Taxation Ruling TR 2007/D10 Income tax: capital gains tax consequences of earnout arrangements
• 7. Convertible notes
• 8. Discussion of members' views regarding new priority issues
• 9. Other business