Timing and transitional provisions



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You can choose to consolidate at any time from 1 July 2002, but you may wish to consolidate sooner rather than later to take advantage of transitional provisions.

Under the transitional provisions, where the group consolidates by 30 June 2004, the head company may choose to retain existing values for tax purposes for the assets brought in by a subsidiary instead of using new cost setting rules. This option can be exercised on a subsidiary-by-subsidiary basis on formation, provided the subsidiary is wholly owned on or before 30 June 2003 (and once wholly owned after 1 July 2002 it must remain so until the group consolidates). The choice whether to use the existing tax values or new cost setting rules was revocable until 31 December 2005. Where the date of consolidation is after 30 June 2004 the cost setting rules must be used.

Losses that pass the continuity of ownership and control transfer tests and were incurred by a company in an income year ending on or before 21 September 1999 may be used by the head company over three years instead of their use being limited by an 'available fraction' of its income and gains. Also, losses that could have been transferred under the grouping provisions may be claimed using a larger available fraction. To use these transitional options, the group must consolidate during the transitional period (1 July 2002 to 30 June 2004) and the loss company must join the group at the time it consolidates. The choice to use these concessions was revocable until 31 December 2005.

The grouping provisions allowing, for example, intra-group loss transfers, capital gains tax (CGT) asset rollovers and dividend rebates - remain available until 30 June 2003. Where the company has a substituted accounting period (SAP), the grouping provisions will continue to be available until the next balance date of the group after 30 June 2003, provided the group chooses to consolidate on the first day of the next SAP income year.

The head company can notify us of its decision to consolidate at any time from the date the group is to be treated as consolidated up to the date it lodges the group's first consolidated income tax return (or, if a return is not required, the date it would have otherwise been due).

Individual member entities continue to pay PAYG instalments until the head company lodges the first consolidated income tax return and receives from us its consolidated PAYG instalment rate. After this, the head company pays consolidated PAYG instalments for the group as a whole.

Figure 4

Figure 4 - Grouping Provisions

Figure 4 - Grouping Provisions

    Last modified: 08 Jul 2014QC 17531