Income Tax Assessment Act 1997
SECTION 820-589 How Subdivision 820-D applies to a MEC group 820-589(1)
This section has effect for the purposes of working out the *adjusted average equity capital of the *head company of a *MEC group for a period (the test period ) that is all or part of an income year if Subdivision 820-D applies to the head company in relation to that period.
Note:
Section 820-587 extends the application of Subdivision 820-D .
820-589(2)
The *head company ' s *ADI equity capital at a particular time during the test period is to be worked out: (a) taking into account an *equity interest or *debt interest in the head company only if it is held at that time by an entity that is not a member of the group; and (b) on the basis that an equity interest or debt interest in an *eligible tier-1 company (other than the head company) that is a member of the group at that time is treated as an equity interest or debt interest (as appropriate) in the head company, but only if it is held at that time by an entity that is not a member of the group; and (c) on the basis of the information that would be contained in a set of consolidated accounts:
(i) prepared, in accordance with the *accounting standard on consolidated accounts, as at that time; and
(ii) covering the members of the group as at that time.
[
CCH Note:
S 820-590 to 820-594 will be inserted by No 23 of 2024, s 3 and Sch 2 item 88, effective 1 July 2024. For application provisions, see note under s
705-60
. S 820-590 to 820-594 will read:
assume that the entity carried on at and just after the joining time the same business that it carried on just before the joining time.
SECTION 820-590 Treatment of FRT disallowed amounts
-
joining case
]
820-590(1)
This section applies if:
(a)
an entity (the
joining entity
) becomes a
*
member of a
*
consolidated group (the
joined group
) at a time (the
joining time
) in an income year (the
joining year
); and
(b)
the joining entity had a
*
FRT disallowed amount for an income year ending before the joining time.
820-590(2)
Subject to subsection
(4)
, the
*
FRT disallowed amount is transferred at the joining time from the joining entity to the
*
head company of the joined group (even if they are the same entity).
820-590(3)
To avoid doubt, the result of the transfer under subsection
(2)
is that the
*
head company of the joined group has the
*
FRT disallowed amount for the income year mentioned in paragraph
(1)(b)
.
820-590(4)
The
*
FRT disallowed amount is transferred under subsection
(2)
only to the extent (if any) that the FRT disallowed amount could have been applied by the joining entity under paragraph
820-56(2)(b)
in respect of an income year (the
trial year
) consisting of the period described in subsection
(5)
if:
(a)
at the joining time, the joining entity had not become a
*
member of the joined group (but had been a
*
wholly-owned subsidiary of the
*
head company if the joining entity is not the head company); and
(b)
the amount applied by the joining entity under paragraph
820-56(2)(b)
in respect of the trial year were not limited by the joining entity
'
s excess mentioned in that paragraph in respect of the trial year.
820-590(5)
For the purposes of subsection
(4)
, the period is the period:
(a)
starting at the latest of the following times:
(i)
the time 12 months before the joining time;
(ii)
the time the joining entity came into existence;
(iii)
the time the joining entity last ceased to be a
*
subsidiary member of a
*
consolidated group, if the joining entity had been a member of a consolidated group before the joining time but was not a
*
member of a consolidated group just before the joining time; and
(b)
ending just after the joining time.
820-590(6)
When working out, for the purposes of subsection
(4)
, whether the joining entity carried on, throughout the
*
trial year (or a period including the trial year):
(a)
the same business as the business it carried on at a particular time; or
(b)
a similar business to the business it carried on at that time;
820-590(7)
If the
*
FRT disallowed amount was for an income year all or part of which occurs in the trial year, the transfer of the FRT disallowed amount under subsection
(2)
is not prevented by the fact that the FRT disallowed amount was for that income year.
820-590(8)
If, apart from this subsection, the
*
head company of the joined group would have 2 or more
*
FRT disallowed amounts (the
transferred FRT disallowed amounts
) for a particular income year as a result of the operation of subsection
(2)
:
(a)
treat it as having only one FRT disallowed amount for the income year; and
(b)
treat that one FRT disallowed amount as being equal to the sum of the transferred FRT disallowed amounts.
SECTION 820-591 Effect of transfer of FRT disallowed amount
820-591(1)
This section applies if an
*
FRT disallowed amount is transferred under section 820-590 from the joining entity to the
*
head company of the joined group.
820-591(2)
For the purposes of subsection
820-59(4)
, this Act operates (except so far as the contrary intention appears) for the purposes of income years ending after the joining time as if the head company had the
*
FRT disallowed amount for the income year in which the joining time occurs.
820-591(3)
For the purposes of applying subsection
820-59(4)
in relation to the *FRT disallowed amount, treat the disallowance year mentioned in paragraph
820-59(4)(b)
as starting at the time of the transfer.
SECTION 820-592 Cancelling the transfer of FRT disallowed amount
820-592(1)
The
*
head company of the joined group may choose to cancel the transfer of the FRT disallowed amount under section 820-590.
820-592(2)
If the
*
head company of the joined group does so, this Act (except this section) operates for all income years ending after the transfer as if it had not occurred under section
820-590
.
820-592(3)
The choice cannot be revoked.
SECTION 820-593 FRT disallowed amount cannot be applied for income year ending after the joining time
820-593
To the extent that the
*
FRT disallowed amount is not transferred under section
820-590
from the joining entity to the
*
head company of the joined group, the FRT disallowed amount cannot be applied under paragraph
820-56(2)(b)
by any entity in respect of an income year ending after the joining time.
SECTION 820-594 Treatment of FRT disallowed amounts
-
leaving case
820-594
To avoid doubt, if the *head company of a *consolidated group has a *FRT disallowed amount and an entity ceases to be a *subsidiary member of the group, the entity is not taken because of section
701-40
(the exit history rule) to have the FRT disallowed amount.
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