Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 820 - Thin capitalisation rules  

Subdivision 820-FA - How the thin capitalisation rules apply to consolidated groups and MEC groups  

Operative provisions

SECTION 820-581   820-581   How this Division applies to head company for income year in which group comes into existence or ceases to exist  


If a *consolidated group or *MEC group:


(a) comes into existence at a time during an income year that is not the start of the income year; or


(b) ceases to exist at a time during an income year that is not the end of the income year;

then, for each of the following periods during that income year:


(c) a period throughout which a company is the *head company of that group; or


(d) a period throughout which that company is the head company of a different consolidated group or MEC group; or


(e) a period throughout which that company is a *member of no consolidated group or MEC group;

this Division (except this section) is to have either:


(f) a single application in relation to the whole of the period; or


(g) 2 or more applications, each in relation to a part of that period.

Example:

Austco Ltd is not a member of a consolidated group for the first 6 months of an income year, but then becomes the head company of a consolidated group which continues in existence for the rest of the income year.

For those first 6 months Austco is an outward investor (general) under section 820-85 . For the rest of the income year Austco is an outward investor (general) under subsection 820-583(2) .

This section ensures that section 820-120 (about part year periods) applies to Austco instead of section 820-85 , so that Subdivision 820-B has 2 separate applications to Austco: one for the first 6 months and the other for the rest of the income year. Under the second application, account is taken of the position of the subsidiary members that are taken to be part of Austco as head company of the consolidated group.


 

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