Income Tax (Transitional Provisions) Act 1997
The Income Tax Assessment Act 1997 and this Act have effect as if an entity (the transitional foreign loss maker ) is not a subsidiary member of a consolidated group at a particular time (the transitional time ) if:
(a) the group came into existence at a particular time (the formation time ) before 1 July 2004; and
(b) apart from this section, the transitional foreign loss maker would be a subsidiary member of the group at the transitional time; and
(c) the transitional time is not later than 3 years after the formation time; and
(d) the head company of the group has made a choice under section 701D-15 to apply this section to the transitional foreign loss maker; and
(e) the continuous ownership condition in subsection (2) is satisfied; and
(f) the foreign loss condition in subsection (3) is satisfied; and
(g) the no-subsidiary condition in subsection (4) is satisfied. Continuous ownership condition 701D-10(2)
The continuous ownership condition is satisfied if the transitional foreign loss maker was a wholly-owned subsidiary of the entity that became the head company of the group throughout the period:
(a) beginning at the start of 1 July 2002; and
(b) ending at the transitional time. Foreign loss condition 701D-10(3)
The foreign loss condition is satisfied if:
(a) the transitional foreign loss maker incurred an overall foreign loss (as defined in former section 160AFD of the Income Tax Assessment Act 1936 ) in respect of the 2001-02 income year or an earlier income year; and
(b) the amount of the overall foreign loss has not been fully taken into account under one or more applications of former section 160AFD of the Income Tax Assessment Act 1936 to the transitional foreign loss maker in relation to an income year or income years ending before the transitional time; and
(c) assuming that the transitional foreign loss maker had become a subsidiary member of a consolidated group at the formation time, as a result all or part of the overall foreign loss would have been transferred at that time to the head company of the group under Division 707 of the Income Tax Assessment Act 1997 .
The no-subsidiary condition is satisfied if, at the transitional time:
(a) the transitional foreign loss maker does not hold any membership interests in any other entity; or
(b) both of the following conditions are satisfied:
(i) the transitional foreign loss maker holds one or more membership interests in one or more other entities;
Transitional foreign loss maker stays in consolidatable group 701D-10(5)
(ii) assuming that the head company of the group (rather than the transitional foreign loss maker) held that interest or those interests, none of those other entities would be a subsidiary member of the group.
To avoid doubt, subsection (1) does not prevent the transitional foreign loss maker from being a member of a consolidatable group at the transitional time for the purposes of:
(a) subsection 126-50(6) of the Income Tax Assessment Act 1997 ; and
(b) paragraphs 170-5(2A) (b) and 170-105(2A) (b) of that Act; and
(c) subparagraph 820-599(1) (b)(iii) of that Act.
Disclaimer and notice of copyright applicable to materials provided by CCH Australia Limited
CCH Australia Limited ("CCH") believes that all information which it has provided in this site is accurate and reliable, but gives no warranty of accuracy or reliability of such information to the reader or any third party. The information provided by CCH is not legal or professional advice. To the extent permitted by law, no responsibility for damages or loss arising in any way out of or in connection with or incidental to any errors or omissions in any information provided is accepted by CCH or by persons involved in the preparation and provision of the information, whether arising from negligence or otherwise, from the use of or results obtained from information supplied by CCH.
The information provided by CCH includes history notes and other value-added features which are subject to CCH copyright. No CCH material may be copied, reproduced, republished, uploaded, posted, transmitted, or distributed in any way, except that you may download one copy for your personal use only, provided you keep intact all copyright and other proprietary notices. In particular, the reproduction of any part of the information for sale or incorporation in any product intended for sale is prohibited without CCH's prior consent.