INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 709 - Other rules applying when entities become subsidiary members etc.  

Subdivision 709-B - Imputation issues  

Operative provisions

SECTION 709-160   Subsidiary member is exempting entity  

709-160(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.

709-160(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 .


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