Income Tax Assessment Act 1997
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Hide history noteSECTION 709-175 Head company is former exempting entity 709-175(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.
709-175(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 .
709-175(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.
709-175(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 .
709-175(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 .
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