New Business Tax System (Consolidation and Other Measures) Act 2003 (16 of 2003)
Schedule 5 Consolidation: imputation rules
Income Tax Assessment Act 1997
4 At the end of Division 709
Add:
Subdivision 709-B - Imputation issues
Guide to Subdivision 709-B
709-150 What this Subdivision is about
This Subdivision modifies the way Division 208 (exempting entities and former exempting entities) operates in relation to consolidated groups.
Table of sections
Operative provisions
709-155 Testing consolidated groups
709-160 Subsidiary member is exempting entity
709-165 Subsidiary member is former exempting entity
709-170 Head company and subsidiary are exempting entities
709-175 Head company is former exempting entity
[This is the end of the Guide.]
Operative provisions
709-155 Testing consolidated groups
(1) To determine whether a *consolidated group is an *exempting entity or *former exempting entity, the tests in Division 208 are applied to the *head company of the group.
(2) However, there are some additional rules that can alter the way that Division 208 applies to a *consolidated group. These are set out in sections 709-160 to 709-175.
(3) In applying those rules to an entity that is a *member of a *consolidated group:
(a) Division 208 is to be applied before those rules; and
(b) that Division is to be applied just after the entity became a member of the group but, for a *subsidiary member, it is to be applied on the assumption that the subsidiary was not a member of the group at that time.
(4) Except as mentioned in paragraph (3)(b), Division 208 has no application to a *subsidiary member of a *consolidated group.
709-160 Subsidiary member is exempting entity
(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.
(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.
709-165 Subsidiary member is former exempting entity
(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 (also the joining time ); and
(c) the entity is a *former exempting entity at the joining time.
(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 *exempting account has an *exempting 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 |
If the *subsidiary member's *exempting account has an *exempting deficit at the joining time: (a) a credit equal to that deficit arises in that account at the joining time; and (b) a debit equal to that deficit arises in the subsidiary's *franking account just before the joining time |
|
5 |
The *subsidiary member's *exempting account does not operate during the period: (a) starting just after the joining time; and (b) ending when the entity ceases to be a subsidiary member of the group |
|
6 |
Item 1 of the table in section 208-115 does not apply to the *head company |
|
7 |
Item 1 of the table in section 208-120 does not apply to the *head company |
|
8 |
Item 1 of the table in section 208-130 does not apply to the *head company |
|
9 |
Item 1 of the table in section 208-145 does not apply to the *head company |
Note 1: Any surplus in the subsidiary's franking account will be transferred to the head company's franking account: see subsection 709-60(2).
Note 2: If the subsidiary's franking account is in deficit, it will be liable for franking deficit tax: see subsection 709-60(3). This deficit may be increased by item 4 in the table in subsection (2).
Note 3: The subsidiary's franking account does not operate while it is a member of the group: see section 709-65.
709-170 Head company and subsidiary are exempting entities
There is no change to the status of the *head company of a *consolidated group if:
(a) the head company is an *exempting entity; and
(b) a *corporate tax entity becomes a *subsidiary member of the group at a time (also the joining time ); and
(c) the entity is an exempting entity at the joining time.
Note 1: If the subsidiary's franking account is in surplus, that surplus will be transferred to the head company's franking account: see subsection 709-60(2).
Note 2: If the subsidiary's franking account is in deficit, it will be liable for franking deficit tax: see subsection 709-60(3).
Note 3: The subsidiary's franking account does not operate while it is a member of the group: see section 709-65.
709-175 Head company is former exempting entity
(1) Subsection (2) operates if:
(a) the *head company of a *consolidated group is a *former exempting entity; and
(b) a *corporate tax entity becomes a *subsidiary member of the group at a time (also the joining time ); and
(c) the entity is an *exempting entity at the joining time.
(2) These rules apply to the *consolidated group.
|
Rules applying to *consolidated group |
|
|---|---|
|
Item |
Rule |
|
1 |
There is no change to the status of the *head company |
|
2 |
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 |
|
3 |
Subsection 709-60(2) (about franking surplus) does not apply to the *subsidiary member |
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.
(3) Subsection (4) operates if:
(a) the *head company of a *consolidated group is a *former exempting entity; and
(b) a *corporate tax entity becomes a *subsidiary member of the group at a time (also the joining time ); and
(c) the entity is a *former exempting entity at the joining time.
(4) These rules apply to the *consolidated group.
|
Rules applying to *consolidated group |
|
|---|---|
|
Item |
Rule |
|
1 |
There is no change to the status of the *head company |
|
2 |
If the *subsidiary member's *exempting account has an *exempting 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 |
|
3 |
If the *subsidiary member's *exempting account has an *exempting deficit at the joining time: (a) a credit equal to that deficit arises in that account at the joining time; and (b) a debit equal to that deficit arises in the subsidiary's *franking account just before the joining time |
|
4 |
The *subsidiary member's *exempting account does not operate during the period: (a) starting just after the joining time; and (b) ending when the entity ceases to be a subsidiary member of the group |
Note 1: If the subsidiary's franking account is in deficit, it will be liable for franking deficit tax: see subsection 709-60(3). This deficit may be increased by item 3 in the table in subsection (4).
Note 2: The subsidiary's franking account does not operate while it is a member of the group: see section 709-65.
(5) There is no change to the status of the *head company of a *consolidated group if:
(a) the head company is a *former exempting entity; and
(b) a *corporate tax entity becomes a *subsidiary member of the group; and
(c) the entity is neither an *exempting entity nor a former exempting entity at the joining time.
Note 1: If the subsidiary's franking account is in surplus, that surplus will be transferred to the head company's franking account: see subsection 709-60(2).
Note 2: If the subsidiary's franking account is in deficit, it will be liable for franking deficit tax: see subsection 709-60(3).
Note 3: The subsidiary's franking account does not operate while it is a member of the group: see section 709-65.