Income Tax Assessment Act 1997

Part 3-90 inserted by No 68 of 2002, s 3 and Sch 1 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec 700-1 of the Income Tax (Transitional Provisions) Act 1997 ).

Div 717 inserted by No 90 of 2002, s 3 and Sch 6 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec 700-1 of the Income Tax (Transitional Provisions) Act 1997 ).

Subdiv 717-A substituted by No 143 of 2007 , s 3 and Sch 1 item 163, applicable in relation to income years, statutory accounting periods and notional accounting periods starting on or after the first 1 July that occurs after 24 September 2007. For savings provisions, see note under Div 770 heading . Subdiv 717-A formerly read:

Subdivision 717-A - Foreign tax credits

SECTION 717-1 What this Subdivision is about  

If an entity becomes a subsidiary member of a consolidated group, its excess foreign tax credits are transferred to the head company of the group, for use in later income years. The head company receives any foreign tax credits that arise because the entity pays foreign tax while it is a subsidiary member of the group.

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History

S 717-1 inserted by No 90 of 2002, s 3 and Sch 6 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec 700-1 of the Income Tax (Transitional Provisions) Act 1997 ).

Objects
SECTION 717-5 Objects of this Subdivision  
717-5(1)
The main objects of this Subdivision are set out in subsections (2), (3) and (4).

717-5(2)
The first of those objects is to allow the ^* head company of a ^* consolidated group to get the benefit of foreign tax paid in respect of foreign income (within the meaning of the Income Tax Assessment Act 1936 ) included in the head company ' s assessable income because another entity is or was a ^* subsidiary member of the group.

717-5(3)
The second of those objects is to allow the ^* head company of a ^* consolidated group to apply, in relation to an income year, ^* excess foreign tax credits of an entity (the joining entity ) that becomes a ^* subsidiary member of the group at a time (the joining time ) if:

(a) the income year starts after the joining time; and

(b) those excess foreign tax credits are from an income year ending before the joining time.

717-5(4)
The third of those objects is to prevent an entity (other than the ^* head company of the group) from applying ^* excess foreign tax credits mentioned in paragraph (3)(b) to increase its own credits in respect of foreign tax.

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History

S 717-5 inserted by No 90 of 2002, s 3 and Sch 6 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec 700-1 of the Income Tax (Transitional Provisions) Act 1997 ).

Foreign tax on amounts in head company ' s assessable income
SECTION 717-10 Head company taken to be liable for subsidiary member ' s foreign tax  
717-10(1)
This section operates if:

(a) an entity was a ^* subsidiary member of a ^* consolidated group for all or part of an income year; and

(b) the assessable income of the ^* head company of the group for that income year included foreign income (within the meaning of the Income Tax Assessment Act 1936 ); and

(c) the entity paid, and was personally liable for, foreign tax (within the meaning of that Act) in respect of that foreign income (whether or not the entity was a subsidiary member of the group at the time of payment).

717-10(2)
Section 160AF of the Income Tax Assessment Act 1936 operates as if:

(a) the ^* head company had paid and been personally liable for the foreign tax; and

(b) the entity had not paid and had not been personally liable for the foreign tax.

Note:

Section 160AF of the Income Tax Assessment Act 1936 provides a foreign tax credit (which is a tax offset) of an amount that depends on:

(a) foreign tax that an entity paid, and was personally liable for, in respect of foreign income included in the entity ' s assessable income; and

(b) the amount of Australian tax payable (worked out as described in that section) in respect of the foreign income.

717-10(3)
This section does not limit the operation of section 160AF of the Income Tax Assessment Act 1936 .

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History

S 717-10 inserted by No 90 of 2002, s 3 and Sch 6 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec 700-1 of the Income Tax (Transitional Provisions) Act 1997 ).

Foreign tax on amounts not in head company ' s assessable income
SECTION 717-15 Transferring subsidiary member ' s excess foreign tax credits from earlier years to head company  
717-15(1)
This section operates for the purposes of section 160AFE of the Income Tax Assessment Act 1936 in relation to an income year if:

(a) an entity (the joining entity ) becomes a ^* subsidiary member of a ^* consolidated group at a time (the joining time ); and

(b) the joining time is:

(i) before or at the start of that income year; and

(ii) after the start of an earlier income year (the earlier year ); and

(c) the joining entity has ^* excess foreign tax credits (the transfer credits ) from the earlier year.

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History

S 717-15(1) amended by No 83 of 2004.

717-15(2)
For those purposes:

(a) the ^* head company of the group is taken to have the transfer credits; and

(b) (Repealed by No 83 of 2004)

(c) if, apart from paragraph (a), the head company has ^* excess foreign tax credits from the earlier year - the transfer credits are taken to be included in those excess foreign tax credits.

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S 717-15(2) amended by No 83 of 2004.

717-15(3)
Subsection (2) also has effect for the purposes of a subsequent operation of this section.

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History

S 717-15(3) amended by No 83 of 2004.

717-15(4)
This section operates separately in relation to each class of foreign income (within the meaning of the Income Tax Assessment Act 1936 ) identified in subsection 160AF(7) of that Act, as if:

(a) the ^* head company ' s foreign income of that class for an income year were the whole of the head company ' s foreign income for that year; and

(b) the joining entity ' s foreign income of that class for an income year were the whole of the joining entity ' s foreign income for that year.

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History

S 717-15 inserted by No 90 of 2002, s 3 and Sch 6 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec 700-1 of the Income Tax (Transitional Provisions) Act 1997 ).

SECTION 717-20 Where entity not subsidiary member for whole of income year  
717-20(1)
This section operates if:

(a) an entity (the joining entity ) is a ^* subsidiary member of a ^* consolidated group for some but not all of an income year (the joining year ); and

(b) there are one or more periods in the joining year (each of which is a non-membership period ) during which the entity is not a subsidiary member of any ^* consolidated group.

Note:

Section 701-30 treats each non-membership period as a separate income year for some purposes.

717-20(2)
Subsection (3) has effect for the purposes of section 701-30 in relation to the joining entity.

717-20(3)
In working out amounts for the joining entity under subsection 701-30(3) in relation to each non-membership period, make these assumptions:

(a) if the joining year starts at the same time as the earliest of those non-membership periods:

(i) subsection 160AFE(2) of the Income Tax Assessment Act 1936 operates in relation to the joining entity for that non-membership period; and

(ii) subsection 160AFE(2) of that Act does not operate in relation to the joining entity for the later non-membership periods (if any);

(b) otherwise - subsection 160AFE(2) of that Act does not operate in relation to the joining entity for any of the non-membership periods.

717-20(4)
Subsection (5) has effect for the purposes of section 717-15 in relation to the ^* head company of the ^* consolidated group for a later income year.

717-20(5)
In working out the amount (if any) of the joining entity ' s transfer credits (within the meaning of paragraph 717-15(1)(c) ) from the joining year, do not include the amount of the joining entity ' s ^* excess foreign tax credits from a non-membership period (if any) that ends at the same time the joining year ends.

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S 717-20 inserted by No 90 of 2002, s 3 and Sch 6 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec 700-1 of the Income Tax (Transitional Provisions) Act 1997 ).

SECTION 717-22 Excess foreign tax credits from non-membership period ending before head company ' s income year starts  
717-22(1)
This section operates for the purposes of section 160AFE of the Income Tax Assessment Act 1936 in relation to an income year (the first use year ) of the ^* head company of a ^* consolidated group and later income years of the head company if:

(a) an entity (the joining entity ) becomes a ^* subsidiary member of the group at a time (the joining time ) that is before or at the start of the head company ' s first use year but after the start of the same income year of the joining entity (because that income year starts at different times for the head company and the joining entity); and

(b) the joining entity has ^* excess foreign tax credits (the transfer credits ) from the non-membership period described in section 701-30 that starts at the start of that income year of the joining entity and ends just before the joining time.

Note:

Under section 701-30 , the non-membership period is treated like an income year.

717-22(2)
For those purposes relating to an income year shown in an item of the table, the ^* head company of the group is taken to have the amount of the transfer credits shown in the item from its earlier income year shown in the item included in its other ^* excess foreign tax credits (if any) from that earlier income year.

Head company ' s transfer credits
	For this income year:	The head company is taken to have this amount of the transfer credits:	From this earlier income year:
1	The first use year	The full amount of the transfer credits	The income year just before the first use year
2	An income year after the first use year	The amount of the transfer credits not yet applied under section 160AFE of the Income Tax Assessment Act 1936	The first use year

717-22(3)
Subsection (2) also has effect for the purposes of a subsequent operation of this section.

717-22(4)
This section operates separately in relation to each class of foreign income (within the meaning of the Income Tax Assessment Act 1936 ) identified in subsection 160AF(7) of that Act, as if:

(a) the ^* head company ' s foreign income of that class for an income year were the whole of the head company ' s foreign income for that year; and

(b) the joining entity ' s foreign income of that class for the non-membership period were the whole of the joining entity ' s foreign income for the period.

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S 717-22 inserted by No 83 of 2004.

SECTION 717-28 Excess foreign tax credits lost on joining consolidated group  
717-28(1)
For the purposes of section 160AFE of the Income Tax Assessment Act 1936 in relation to an income year ending after the time an entity becomes a ^* subsidiary member of a ^* consolidated group, the entity is taken not to have any ^* excess foreign tax credits from an income year, or non-membership period described in section 701-30 , that ended before or at that time.

717-28(2)
Subsection (1) does not affect the operation of section 160AFE of the Income Tax Assessment Act 1936 in accordance with section 717-15 or 717-22 .

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S 717-28 inserted by No 83 of 2004.

SECTION 717-30 Exit history rule does not treat leaving entity as having foreign tax credits  
717-30(1)
This section operates in relation to an income year if:

(a) an entity (the leaving entity ) ceases to be a ^* subsidiary member of a ^* consolidated group before the end of that income year; and

(b) the ^* head company of the group has ^* excess foreign tax credits from an earlier income year.

717-30(2)
To avoid doubt, the leaving entity is not taken because of section 701-40 (the exit history rule) to have those ^* excess foreign tax credits.

717-30(3)
It does not matter whether the ^* head company has those ^* excess foreign tax credits because of section 717-10 or 717-15 (whether in relation to the leaving entity or another entity) or because of another provision.

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History

S 717-30 inserted by No 117 of 2002, s 3 and Sch 7 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec 700-1 of the Income Tax (Transitional Provisions) Act 1997 ).

Subdiv 717-A inserted by No 90 of 2002, s 3 and Sch 6 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec 700-1 of the Income Tax (Transitional Provisions) Act 1997 ).

S 717-10(1) amended by No 134 of 2024, s 3 and Sch 1 item 17, by substituting " (except * credit absorption tax, * unitary tax, * foreign IIR tax or * foreign UTPR tax) " for " (except * credit absorption tax or * unitary tax) " in para (c), effective 11 December 2024 and applicable in relation to income years ending on or after 1 January 2024.

S 717-10 substituted by No 143 of 2007 , s 3 and Sch 1 item 163, applicable in relation to income years, statutory accounting periods and notional accounting periods starting on or after the first 1 July that occurs after 24 September 2007. For savings provisions, see note under Div 770 heading . For former wording, see note under Subdiv 717-A heading .

S 717-10 inserted by No 90 of 2002, s 3 and Sch 6 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec 700-1 of the Income Tax (Transitional Provisions) Act 1997 ).