ATO Interpretative Decision
ATO ID 2004/354
Income Tax
Consolidation - choice to consolidate - cannot amend date specified in effective choiceFOI status: may be released
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A note has been added about the application of amendments to section 703-50 contained in Tax Laws Amendment (2010 Measures No. 1) Act 2010 (No. 56 of 2010)(Schedule 5, Part 18). The note does not change the view expressed in this ATO ID.
ATO ID 2004/354 is amended to remove the reference to ATO ID 2004/355, which was withdrawn following the decision in MW McIntosh Pty Ltd v. FC of T (2008) FCA 1949.
Status of this decision: Decision Current
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Where an entity has made a choice to consolidate in accordance with subsection 703-50(1) of the Income Tax Assessment Act 1997 (ITAA 1997), can the date specified in the choice be changed if the group discovers that it was able to consolidate from a date earlier than the date notified to the Commissioner?
Decision
No - subsection 703-50(2) of the ITAA 1997 expressly states that the date of consolidation specified in the choice cannot be amended, once a company has notified the Commissioner of an effective choice to form a consolidated group under subsection 703-50(1) of the ITAA 1997.
Facts
A head company provided the Commissioner with its choice to form a consolidated group with effect from 1 July 2003. The choice was made in accordance with subsection 703-50(1) of the ITAA 1997. All of the information recorded in the notice is correct. That is, it contains everything required to be included in the approved form, accurately identifies all the members of the group and accurately reflects the decision of the head company's directors to consolidate from 1 July 2003.
Since making the choice, the head company has discovered that the group was in fact eligible to consolidate from an earlier date than that specified in the choice provided to the Commissioner. The head company wishes to change the date of effect to that earlier date.
Reasons for Decision
Subsection 703-50(1) of the ITAA 1997 sets out the conditions for making a choice to consolidate:
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- the choice must be made in the approved form;
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- there must be a consolidatable group on the day specified in the choice;
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- the choice must be provided to the Commissioner within the period specified in subsection 703-50(3) of the ITAA 1997; and
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- the company making the choice must be the head company of the consolidatable group on the day specified.
Subsection 703-50(2) of the ITAA 1997 provides that the date of effect specified in the choice cannot be amended once an effective choice to consolidate has been made in accordance with subsection 703-50(1) of the ITAA 1997.
Where a choice to consolidate has been made in accordance with subsection 703-50(1) of the ITAA 1997 but the Commissioner is satisfied that the choice contains information that is incorrect in a material particular, the combined effect of subsections 703-50(5) and (6) of the ITAA 1997 is that the choice has no effect unless the Commissioner gives the company written notice that the choice is effective. However, the Commissioner is not able to give effect under subsection 703-50(6) to a notice which does not satisfy the conditions of subsection 703-50(1) of the ITAA 1997.
In this case, the head company has made the choice to consolidate in accordance with subsection 703-50(1) of the ITAA 1997. That is, the choice contained everything required in the approved form and correctly identified all members of the consolidated group. Further, the Commissioner is satisfied that, even though a consolidatable group existed at an earlier date, the choice contains no materially incorrect information because it accurately reflects the decision of the head company's directors to consolidate from 1 July 2003. Accordingly, the head company is bound by its choice to consolidate with effect from 1 July 2003.
Year of income: Year ended 30 June 2003
Legislative References:
Income Tax Assessment Act 1997
subsection 703-50(1)
subsection 703-50(2)
subsection 703-50(3)
subsection 703-50(5)
subsection 703-50(6)
ATO ID 2004/356
Keywords
Consolidation - formation
Formation time
Head Company
ISSN: 1445-2782