Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 709 - Other rules applying when entities become subsidiary members etc.  

Subdivision 709-B - Imputation issues  

Operative provisions

SECTION 709-160   Subsidiary member is exempting entity  

709-160(1)    
This section operates if:

(a) the ^* head company of a ^* consolidated group is neither an exempting entity nor a ^* former exempting entity; and

(b) a ^* corporate tax entity becomes a ^* subsidiary member of the group at a time (the joining time ); and

(c) the entity is an ^* exempting entity at the joining time.

709-160(2)    
These rules apply to the ^* consolidated group.

Rules applying to *consolidated group
Item	Rule
1	The *head company becomes a *former exempting entity at the joining time
2	The *head company has both a *franking account and an *exempting account
3	If the *subsidiary member ' s *franking account has a *franking surplus at the joining time:
	(a)	a debit equal to that surplus arises in that account at the joining time; and
	(b)	a credit equal to that surplus arises in the *exempting account of the *head company at the joining time
4	Subsection 709-60(2) (about franking surplus) does not apply to the *subsidiary member
5	Item 1 of the table in section 208-115 does not apply to the *head company
6	Item 1 of the table in section 208-120 does not apply to the *head company
7	Item 1 of the table in section 208-130 does not apply to the *head company
8	Item 1 of the table in section 208-145 does not apply to the *head company

Note 1:

If the subsidiary ' s franking account is in deficit, it will be liable for franking deficit tax: see subsection 709-60(3) .

Note 2:

The subsidiary ' s franking account does not operate while it is a member of the group: see section 709-65 .