Income Tax (Transitional Provisions) Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 701C - Modified application etc. of provisions of Income Tax Assessment Act 1997: transitional foreign-held membership structures  

Subdivision 701C-B - Membership rules allowing foreign holding  

SECTION 701C-10   Additional membership rules where entities are interposed between the head company and a subsidiary member - case where an interposed entity is a foreign resident and the subsidiary member is a company  

701C-10(1)    
This section describes, for the purposes of item 2, column 4 of the table in subsection 703-15(2) of the Income Tax Assessment Act 1997 , a set of requirements that must be met for an entity (the test entity ) to be a subsidiary member of a consolidated group or a consolidatable group at a particular time (the test time ).

Note:

This subsection applies in relation to a MEC group as if the reference to item 2, column 4 of the table in subsection 703-15(2) of the Income Tax Assessment Act 1997 were a reference to subparagraph 719-10(1) (b)(ii) of that Act (see subsection 719-2(3) of this Act).

Test entity must be company

701C-10(2)    
At the test time, the test entity must be a company.

At least one interposed entity must be a non-resident company or non-resident trust

701C-10(3)    
At the test time, at least one of the interposed entities must be:

(a) a company (a non-resident company ) that is a foreign resident; or

(b) a trust (a non-resident trust ) that does not meet the requirements in any item of the table in section 703-25 of the Income Tax Assessment Act 1997 .

The interposed entities must all be of a particular kind

701C-10(4)    
At the test time, each of the interposed entities must be:

(a) a subsidiary member of the group; or

(b) a non-resident company; or

(c) a non-resident trust; or

(d) an entity that holds membership interests in an entity interposed between it and the test entity, or in the test entity, only as a nominee of one or more entities each of which is a member of the group, a non-resident company or a non-resident trust; or

(e) a partnership, each of the partners in which is a non-resident company or a non-resident trust.

Test entity must be a subsidiary member on assumption that non-resident companies and non-resident trusts were subsidiary members

701C-10(5)    
At the test time, it must be the case that the test entity would be a subsidiary member of the group if each interposed entity that is a non-resident company or non-resident trust were a subsidiary member of the group.

Additional requirement for consolidatable groups

701C-10(6)    
If the group is a consolidatable group, the test time must be before 1 July 2004.

Additional requirement for consolidated groups at formation

701C-10(7)    
If the group is a consolidated group and the test time is the time at which the group comes into existence as a consolidated group, the test time must be before 1 July 2004.

Additional requirement for consolidated groups after formation

701C-10(8)    
If:

(a) the group is a consolidated group; and

(b) the test time is after the group comes into existence; and

(c) at the test time, one or more of the membership interests in the test entity are held by:

(i) a non-resident company; or

(ii) a non-resident trust; or

(iii) an entity that holds the membership interests only as a nominee of one or more entities each of which is a non-resident company or a non-resident trust; or

(iv) a partnership, each of the partners in which is a non-resident company or a non-resident trust;

then:

(d) from the time the group came into existence as a consolidated group until the test time, the test entity must have been a subsidiary member of the group; and

(e) at the time the group came into existence as a consolidated group, one or more of the membership interests in the test entity must have been held by an entity of a kind mentioned in subparagraph (c)(i), (ii), (iii) or (iv).