Edited version of your written advice

Authorisation Number: 1013040617219

Ruling

Subject: Income tax - consolidation - membership (including rules) - other

Question 1

For the purposes of the single entity rule (SER) in section 701-1 of the Income Tax Assessment Act 1997 (ITAA 1997), if a deregistered company (DC) is reinstated under section 601AH of the Corporations Act 2001 (Cth)(Corporations Act), can the head company of ABC Limited consolidated group rely on Taxation Determination TD 2007/15 to treat the reinstated DC (other than Lower Tier Deregistered Companies)(LTDC) as having been a member of the ABC Limited consolidated group since it was formed on 1 July 20xx?

Answer

Yes. Upon reinstatement, each DC (other than a LTDC) is able to rely on TD 2007/15 to treat the reinstated DC as having been a member of the ABC Pty Ltd consolidated group since 1 July 20xx.

Question 2

For the purposes of the SER in section 701-1 of the ITAA 1997, if one or more DC is reinstated under section 601AH of the Corporations Act, can companies in which one or more reinstated DC had a direct or indirect interest (each an Interposed Company)(IC) and each LTDC upon its reinstatement be treated as having been members of the ABC Limited consolidated group since it was formed on 1 July 20xx?

Answer

No. Even upon the reinstatement of each of the DCs which held all the direct or indirect interests in each IC or LTDC, neither the ICs nor the LTDCs (upon their own reinstatement) can be treated as members of the ABC Limited consolidated group since it was formed on 1 July 20xx. This is because the reinstatement of the DCs cannot overcome the fact that neither the ICs nor the LTDCs were wholly owned subsidiaries of ABC Limited on 1 July 20xx. Instead, each IC would only be eligible to be a member of the ABC Limited consolidated group from the time of the reinstatement of all the relevant DCs which held all the direct or indirect interest in each IC. Similarly, each of the LTDC is only eligible to be a subsidiary member of the ABC Limited consolidated group from the time of the reinstatement of the LTDC and all the DCs which held all the direct or indirect interests in the LTDC

This ruling applies for the following periods:

1 July 20xx to 30 June 2018

The scheme commences on:

The scheme commenced in the relevant year

Relevant facts and circumstances

The proceeding facts and information are based on the following documents provided by the applicant:

• Private ruling application dated late September 20yy;

• Letter to ATO dated mid-October 20yy; and

• Amendments to private ruling application dated mid- October 20yy

ABC Limited is a company in liquidation. On a particular date in 20yy, ABC Limited elected to form a consolidated group effective 1 July 20xx, comprising of itself as the head company and less than twenty subsidiaries.

Deregistered Companies

The liquidator of ABC Limited is considering making an application to ASIC or the Supreme Court/Federal Court pursuant to section 601AH of the Corporations Act 2001 to reinstate a number of deregistered companies (DC) which were previously wholly-owned by ABC Limited.

Each DC was incorporated in Australia and was a resident of Australia for the purposes of the ITAA 1936 as it was in force at the time of deregistration and, if reinstated, would also be a resident of Australia and not a prescribed dual resident (as defined in subsection 6(1) of the ITAA 1936). Each DC, upon reinstatement, would be a wholly-owned subsidiary of ABC Limited.

Lower Tier Deregistered Companies

Direct or indirect interests in some of the DCs referred to above were also held by one or more other deregistered companies (at the time of their deregistration) and existing subsidiaries of ABC Limited. For the purpose of this ruling and ease of reference, these nine deregistered companies are referred to as Lower Tier Deregistered Companies or LTDCs.

Interposed companies

Interposed companies or ICs are companies in which one or more DCs had a direct or indirect interest and the sole reason the company is currently prevented from satisfying the membership requirements in section 703-15 of the ITAA 1997 is the existence of one or more such interests in the company.

Although the Australian Securities and Investment Commission (ASIC) could have dealt with the shares in the ICs and LTDCs that were vested in it during the period of deregistration, ASIC has not in fact had any dealings with the shares.

Anti-avoidance rules

Part IVA of the ITAA 1936 contains a general anti-avoidance rule that can apply in certain circumstances if you or another taxpayer obtains a tax benefit in connection with an arrangement and it can be concluded that the arrangement, or any part of it, was entered into or carried out by any person for the sole or dominant purpose of enabling a tax benefit to be obtained. If Part IVA applies, the tax benefit can be cancelled, for example, by disallowing a deduction that was otherwise allowable.

We have not fully considered the application of Part IVA to the arrangement you asked us to rule on, or to an associated or wider arrangement of which that arrangement is part.

If you want us to rule on whether Part IVA applies, we will first need to obtain and consider all the facts about the arrangement which are relevant to determining whether Part IVA may apply.

For more information on Part IVA, go to our website www.ato.gov.au and enter 'part iva general' in the search box on the top right of the page, then select: 'Part IVA: the general anti-avoidance rule for income tax'

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 701-1,

Income Tax Assessment Act 1997 Section 703-15,

Income Tax Assessment Act 1997 Section 703-30,

Corporations Act 2001 Section 601AD,

Corporations Act 2001 Section 601AE,

Corporations Act 2001 Section 601AH,

Corporations Act 2001 Section 1408 and

Australian Securities and Investment Commission Act 2001 Section 8.

Reasons for decision

Question 1

Under subsection 703-15(2) of the ITAA 1997, an entity is a subsidiary member of a consolidated group if it meets all the requirements in item 2 of the table, comprising income tax treatment, Australian residence and ownership requirements.

The income tax treatment requirements are listed in Column 2 of item 2 of the table in subsection 703-15(2). The requirements are that:

(a) the entity must be a company, trust or partnership (but not one covered by

section 703-20); and

(b) if the entity is a company, all or some of its taxable income (if any) must be

taxable apart from this Part at a rate that is or equals the corporate tax rate

(as defined in subsection 995-1(1) of the ITAA 1997); and

(c) the entity must not be a non-profit company (as defined in the

Income Tax Rates Act 1986)

The Australian residence requirements are listed in Column 3 of item 2 of the table in subsection 703-15(2) of the ITAA 1997. The requirements are that the entity must:

(a) be an Australian resident (but not a prescribed dual resident) if it is a company; or

(b) comply with section 703-25, if it is a trust; or

(c) be a partnership

The ownership requirements are listed in Column 4 of item 2 of the table in subsection 703-15(2) of the ITAA 1997. The entity must be a wholly-owned subsidiary of the head company of the group and, if there are interposed between them any entities, the set of requirements in section 703-45 of the ITAA 1997, section 701C-10 or section 701C-15 of the Income Tax (Transitional Provisions) Act 1997 (IT(TP)A 1997).

Sections 701C-10 and 701C-15 of the IT(TP)A 1997 are not relevant on the facts here.

Section 703-30 of the ITAA 1997 explains when an entity is a wholly-owned subsidiary of another. Subsection 703-30(1) states that:

One entity (the subsidiary entity) is a wholly-owned subsidiary of another entity (the holding entity) if all the membership interests in the subsidiary entity are beneficially owned by:

(a) the holding entity; or

(b) one or more wholly-owned subsidiaries of the holding entity; or

(c) the holding entity and one or more wholly-owned subsidiaries of the holding entity

DCs currently do not satisfy membership requirements

Currently, the ABC Limited consolidated group comprises of less than twenty subsidiary members and ABC Limited as the head company. There are however, more than fifteen deregistered companies, known in this ruling as DCs, which are currently not eligible to be members of the ABC Limited consolidated group but which may qualify if they are reinstated.

Effect of reinstating a DC

Currently, the only reason that a DC (other than a LTDC) fails to satisfy the membership requirements under subsection 703-15(2) of the ITAA 1997 is the deregistration of that DC. Taxation Determination TD 2006/581: Income Tax: consolidation: will a subsidiary company that is deregistered cease to be a member of a consolidated group with the consequence that it is treated as a leaving entity for the purposes of Division 711 of the Income Tax Assessment Act 1997? explains that a company that has been deregistered cannot continue to meet the requirements of section 703-15 because the company ceased to exist from that time pursuant to subsection 601AD(1) of the Corporations Act. Aside from their deregistration, each DC is a company that would otherwise satisfy the income tax treatment requirements, Australian residence requirements and ownership requirements as companies that are wholly-owned subsidiaries of ABC Limited.

Section 601AH of the Corporations Act permits a deregistered company to be reinstated by ASIC or by the Court. The effect of reinstatement is stated in subsection 601AH(5) as follows:

If a company is reinstated, the company is taken to have continued in existence as if it had not been deregistered. A person who was a director of the company immediately before deregistration becomes a director again as from the time when ASIC or the Court reinstates the company. Any property of the company that is still vested in the Commonwealth or ASIC revests in the company. If the company held particular property subject to a security or other interest or claim, the company takes the property subject to that interest or claim.

The liquidator of ABC Limited proposes to make an application to ASIC or the Court to reinstate the DCs pursuant to section 601AH of the Corporations Act.

TD 2007/15 is applicable

TD 2007/15: Income tax: consolidation: if a member of a consolidated group is reinstated under section 601AH of the Corporations Act 2001 after having been deregistered, will it be taken to have continued to satisfy the membership requirements in section 703-15 of the Income Tax Assessment Act 1997 during the period between deregistration and reinstatement? explains that if the deregistration of a member a consolidated group caused it to fail to meet the membership requirements in subsection 703-15(2) of the ITAA 1997, the effect of a subsequent reinstatement of that member under section 601AH of the Corporations Act is that the member will be taken to have continued to satisfy the membership requirements in subsection 703-15(2) during the period between deregistration and reinstatement. This is on the basis that subsection 601AH(5) of the Corporations Act deems a continuing existence of the company in the period from deregistration to reinstatement.

We accept that the circumstances of the DCs (other than the LTDCs) comes within the class of entity or scheme covered by TD 2007/15 since the deregistration of each DC is the sole reason that caused each company to fail to meet the membership requirements in subsection 703-15(2) of the ITAA 1997. Therefore, upon reinstatement, each DC (other than a LTDC) would be able to rely on TD 2007/15 such that each DC (other than a LTDC) will be taken to have continued in existence as if it had not been deregistered and eligible to be a member of the ABC Limited consolidated group from 1 July 20xx.

As a consequence, the SER in section 701-1 of the ITAA 1997 applies and each DC (other than a LTDC) is also taken to be a part of the head company rather than separate entities for head company and entity core purposes, for the period commencing 1 July 20xx and until such time they remain subsidiary members of the consolidated group.

The eligibility of the remaining nine DCs, which are all LTDCs, is addressed in Question 2.

Question 2

Lower Tier Deregistered Companies

LTDCs are DCs in which some of the shareholding in the company was held directly or indirectly by one or more other DC at the time of deregistration. As is the case for all other DCs, the nine LTDCs currently do not meet the membership requirements to be a subsidiary member of the ABC Limited consolidated group. As discussed in our answer to Question 1, all the DCs cease to exist on deregistration and therefore cannot satisfy the membership requirements in subsection 703-15(2) of the ITAA 1997.

TD 2007/15 does not apply

TD 2007/15 addresses the situation where a previous member of a consolidated group fails to meet the membership requirements because of its deregistration but is subsequently able to following the reinstatement of that entity.

However, unlike the case of a DC, the deregistration of a LTDC is not the sole reason why a LTDC currently fails to meet the membership requirements in subsection 703-15(2) of the ITAA 1997. This is because the eligibility of a reinstated LTDC to be a subsidiary member depends on it satisfying the ownership requirement and be a wholly-owned subsidiary of the head company which is dependent on:

(a) the reinstatement of the LTDC itself; and

(b) the reinstatement of all the DCs that held a direct or indirect interest in the reinstated LTDC (at the time of deregistration of the LTDC); and

(c) the conversion into wholly-owned companies all ICs interposed between the reinstated DC and the reinstated LTDC.

Therefore, the reinstatement alone of a LTDC is not sufficient to enable it to satisfy the membership requirements to be a subsidiary member of the ABC Limited consolidated group. For this reason, the class of entity or scheme covered by TD 2007/15 is not applicable to the circumstances of the LTDCs and the ruling cannot be relied upon to treat these LTDCs upon their reinstatement as having been members of the ABC Limited consolidated group since it was formed on 1 July 20xx.

Applicable law

The eligibility of each LTDC upon reinstatement to be a member of the ABC Limited consolidated group is determined by considering the effect of reinstatement of a company under Part 5A of the Corporations Act and section 703-15 of the ITAA 1997.

Deregistration and vesting of property in ASIC

Currently, the deregistration of companies is dealt with under Part 5A.1 of the Corporations Act.

Subsection 601AD(1) of the Corporations Act provides that a company ceases to exist on deregistration.

Subsection 601AD(2) of the Corporations Act provides that:

On deregistration, all the company's property (other than any property held by the company on trust) vests in ASIC. If company property is vested in a liquidator (other than any company property vested in a liquidator on trust) immediately before deregistration, that property vests in ASIC. This subsection extends to property situated outside this jurisdiction.

(emphasis added)

Subsection 601AD(4) of the Corporations Act provides that:

ASIC has all the powers of an owner over property vested in it under subsection (2).

'Property' for the purposes of Part 5A.1 of the Corporations Act

'Property' is defined in section 9 of the Corporations Act as:

any legal or equitable estate or interest (whether present or future and whether vested or contingent) in real or personal property of any description and includes a thing in action….

Under section 9, the meaning of property in Part 5A.1 (of which section 601AD is part of) has a meaning affected by section 601 of the Corporations Act. Section 601 of the Corporations Act is not relevant based on the facts.

Clearly, the membership interests in a company, which are personal property (being incorporeal personal property), falls within the wide definition of property under section 9 of the Corporations Act. Therefore, a membership interest in a LTDC, to the extent it was held by a DC at the time of its deregistration, is property that vests in ASIC on deregistration of the DC pursuant to subsection 601AD(2).

Section 601AE

Section 601AE of the Corporations Act specifies what the Commonwealth or ASIC can do with property vested in it under section 601AD.

Under subsection 601AE(2), if property vests in ASIC under subsection 601AD(2), ASIC may:

(a) dispose or deal with the property as it sees fit; and

(b) apply any money it receives to:

(i) defray expenses incurred by ASIC in exercising its powers in relation to the company under this Chapter; and

(ii) make payments authorised by subsection (3).

ASIC must deal with the rest (if any) under Part 9.7

Effect of reinstatement

Section 601AH of the Corporations Act deals with the reinstatement of deregistered companies. The effect of reinstatement is stated in subsection 601AH(5) as follows:

If a company is reinstated, the company is taken to have continued in existence as if it had not been deregistered. A person who was a director of the company immediately before deregistration becomes a director again as from the time when ASIC or the Court reinstates the company. Any property of the company that is still vested in the Commonwealth or ASIC revests in the company. If the company held particular property subject to a security or other interest or claim, the company takes the property subject to that interest or claim. (emphasis added)

(emphasis added)

Revesting of property

Although subsection 601AH of the Corporations Act confirms that property of a deregistered company revests in the company when it is reinstated, it is unclear from what time the property revests. One view is that given the reinstated company is taken to have always existed, the property should be taken to revest retrospectively to the time of deregistration. This is the view contended by the applicant. However, the better view of the matter which is supported by a number of judicial decisions (see below) is that property of a reinstated company revests only from the time of reinstatement, not deregistration.

The timing of the revesting is critical to the question of whether the LTDCs can upon reinstatement be members of the ABC Limited consolidated group since it was formed on 1 July 20xx. Clearly, if the revesting of the membership interests in a LTDC only occurs from the time of reinstatement rather than deregistration, this means that it is impossible for the LTDC to be members of the ABC Limited consolidated group from 1 July 20xx since some of the membership interests in the LTDC are at that time (and up until reinstatement) held by ASIC rather than the DCs or ABC Limited.

Cases supporting vesting from reinstatement

In White v. Baycorp Advantage Business Information Services Ltd [2006] NSWSC 441, Campbell J expressed the following views [at 115]:

….s601AH(5) provides only a limited measure of retrospectivity concerning title to the property of the company, so that the property revests in it only from the time of reinstatement.

(emphasis added)

In Foxman v. Credex [2007] NSWSC 1422, White J discussed the intended effect of reinstatement under subsection 601AH(5) of the Corporations Act and explained how each of the three sentences after the first sentence in subsection 601AH(5) effectively limits the form of the reinstatement. Specifically, in relation to property of the company, his honour commented [at 42] that:

Prima facie, the third sentence suggests that property which revests in the company is property which is still vested in ASIC immediately before reinstatement. Again, that suggest that, notwithstanding the first sentence of s601AH(5), although the company is taken to have continued in existence as if it had not been deregistered, it is not taken to have continued to have had the property which it had immediately before deregistration....The authorities on s601AH(5) show that the first sentence is indeed qualified by the following sentences.

(emphasis added)

In CGU Workers Compensation (NSW) v. Rockwall Interiors Pty Ltd [2006] NSWSC 690, Barrett J endorsed [at 17] the analysis of Campbell J in White v. Baycorp Advantage Business Information Services Ltd and expressed a similar view that subsection 601AH(5) of the Corporations Act creates only a limited form of retrospectivity. Barrett J [at 17] expressed the view that subsection 601AH(5):

….recognises expressly that property of the company at the time of deregistration…is not to be regarded as owned by the company throughout the period of the company's non-existence.

In summary, there is a consistent line of judicial authority supporting the view that the reinstatement of a company under subsection 601AH(5) provides only a limited form of retrospectivity and that property of a reinstated company that is still vested in ASIC revests in the reinstated company only from the time of its reinstatement.

LTDCs are not wholly-owned subsidiaries of ABC Limited on 1 July 20xx

The date of revesting has an adverse impact on the ability of LTDCs to be members of ABC Limited consolidated group on 1 July 20xx. Specifically, even where each LTDC is reinstated together with the all the relevant DCs that held direct or indirect interests in the LTDC, each LTDC will not be eligible to be a member of ABC Limited consolidated group on 1 July 20xx because it will not be a wholly-owned subsidiary of ABC Limited on that date. This is due to some of the direct or indirect interests in these LTDCs being held by ICs which are interposed between the LTDC and the DC (with the indirect interest in the LTDC), and the fact that the interests of the DC in these ICs are on that date actually held by ASIC thus preventing the IC and the LTDC from being wholly-owned companies of ABC Limited.

Accordingly, each LTDC does not meet the membership requirements to be a subsidiary member of the ABC Limited consolidated group from formation on 1 July 20xx to the date of reinstatement of each LTDC and the DCs that held a direct and indirect interest in the LTDC.

Property that vests in ASIC

The applicant contends that even if property revests from the time of reinstatement (rather than retrospectively to the time of deregistration), the limitations imposed on ASIC's ability to deal with the property vested in it means that the property was held not for the benefit of ASIC or the Commonwealth but for the benefit of the deregistered company once it is reinstated. The effect of this, as contended by the applicant, is that the deregistered company upon its reinstatement is taken to have always beneficially owned the shares in the LTDC.

The Commissioner does not accept this is the case upon review of the relevant legislation concerning the property of a deregistered company. As mentioned, on deregistration all the company's property (other than property held by the company on trust) vests in ASIC pursuant to subsection 601AD(2) of the Corporations Act. When property vests in ASIC, it means that any rights that the deregistered company had in the property now belong to ASIC (or ASIC on behalf of the Commonwealth). Therefore, the Commissioner does not accept that the shares in the LTDC which were held by the DCs at the time of deregistration were held for the benefit of the DCs. This is also supported by section 8 of the Australian Securities and Investments Commission Act 2001 (ASIC Act 2001)

Subsection 8(3) and (4) of the ASIC Act 2001 states as follows:

(3) Any real or personal property held by ASIC is held for and on behalf of the Commonwealth.

(4) Any money received by ASIC is received for and on behalf of the Commonwealth.

(emphasis added)

'Property' is defined in subsection 5(1) of the ASIC Act 2001 as follows:

means any legal or equitable estate or interest (whether present or future and whether vested or contingent) in real or personal property of any description and includes a thing in action and money.

It is clear from subsection 8(3) of the ASIC Act 2001 that any property held by ASIC is held for and on behalf of the Commonwealth. This means that the Commonwealth is the beneficial owner of property held by ASIC, including property that vests in ASIC under subsection 601AD(2) of the Corporations Act. Property, under subsection 5(1) of the ASIC Act 2001 includes personal property of any description which would include membership interests in other companies held by a deregistered company that may have vested in ASIC under subsection 601AD(2) of the Corporations Act.

Therefore, the combined effect of subsection 601AD(2) of the Corporations Act and subsection 8(3) of the ASIC Act 2001 is that membership interests held by a DC in another company at the time of its deregistration is property that vests in ASIC and is held by ASIC for an on behalf of the Commonwealth.

The above provisions in the ASIC Act 2001 means it is difficult to argue that anyone else other than the Commonwealth has beneficial ownership of the direct or indirect membership interests in a LTDC previously held by a DC from the time that the property is vested in ASIC on deregistration of the relevant DC.

The Commissioner is therefore also unable to accept the proposition contended by the ruling applicant that a trust relationship exists, or even one that is analogous to a trust relationship, whereby ASIC could be seen as a trustee holding the relevant membership interests for the benefit of the deregistered company during the period of deregistration. Once again, subsection 8(3) of the ASIC Act 2001 makes it clear that any property that is held by ASIC is held for and on behalf of the Commonwealth. Similarly, even on a very wide reading of the term 'beneficial ownership' for the purposes of section 703-30 of the ITAA 1997, the relevant provisions of the ASIC Act 2001 mentioned makes it difficult for the Commissioner to conclude anything other than the Commonwealth being the only party that has beneficial ownership of the shares in the ICs and LTDCs vested in ASIC under subsection 601AD(2) of the Corporations Act.

LTDCs not wholly-owned companies on 1 July 20xx

Accordingly, the consideration of how property of a deregistered company is treated under the Corporations Act and ASIC Act 2001, leads to the conclusion that even upon reinstatement of these LTDCs, the membership interests in these LTDCs were not beneficially owned by ABC Limited on 1 July 20xx and in any subsequent period prior to reinstatement of the DCs. Therefore, the LTDCs are not eligible to be subsidiary members of ABC Limited consolidated group since it was formed on 1 July 20xx.

Therefore, even on the reinstatement of each and all the LTDCs and the relevant DCs which held direct or indirect interests in them, ABC Limited cannot for the purposes of the SER in section 701-1 of the ITAA 1997 treat these LTDCs as having been members of the ABC Limited consolidated group since 1 July 20xx. Instead, the earliest time the LTDCs are able to satisfy the membership requirements to be members of the ABC Limited consolidated group is the date of their reinstatement, if and when that happens, provided that the DCs which held a direct or indirect interest in the LTDC are also reinstated at the same time.

IC not wholly-owned companies on 1 July 20xx

ICs are companies in which one or more DCs previously held a direct or indirect interest and the sole reason the company is currently prevented from satisfying the membership requirements in section 703-15 of the ITAA 1997 is the existence of one or more such interests in the company.

TD 2007/15 does not apply

On the question of whether the reinstatement of one or more DCs which held a direct or indirect interests in a IC before deregistration would be sufficient to enable an IC to be a member of the ABC Limited consolidated group from formation, the Commissioner agrees with you that TD 2007/15 cannot apply to the circumstances of these ICs because they do not come within the class of entity or scheme covered by the ruling.

TD 2007/15 addresses the situation where a previous member of a consolidated group fails to meet the membership requirements because of its deregistration but is subsequently able to following the reinstatement of that entity. Notably, the ruling does not address the eligibility of an entity that has not been deregistered and whose eligibility to be a member of a consolidated group is dependent upon the reinstatement of not itself (for the obvious reason that it is not deregistered) but another deregistered entity or entities.

Application of the law

The eligibility of a IC to be a member of ABC Limited consolidated group from formation is determined according to section 703-15 of the ITAA 1997, as impacted by Chapter 5A of the Corporations Act. Therefore, the same considerations involved in determining whether a LTDC is eligible to be a member of the ABC Limited consolidated group, as considered above, are also applicable with respect to an IC.

Therefore:

• The membership interests in each IC held by each DC prior to deregistration is 'property' for the purposes of subsections 601AD(2), 601AE(2) and 601AH(5) of the Corporations Act;

• These membership interests vested in ASIC under subsection 601AD(2) on the deregistration of the DC which held the interest in the IC.

• These membership interests only revest in the DC from the time of reinstatement of the DC, in accordance with subsection 601AH(5) and the decisions in White v. Baycorp Advantage Business information Services Ltd, Foxman v. Credex and CGU Workers Compensation (NSW) v. Rockwall Interiors Pty Ltd; and

• ASIC holds these membership interests for and on behalf of the Commonwealth during the period of deregistration pursuant to subsection 8(3) of the ASIC Act 2001.

Accordingly, even upon the reinstatement of all the DCs which held direct and indirect interests in a IC, the IC will not satisfy the membership requirements to be a subsidiary member of the ABC Limited consolidated group since formation on 1 July 20xx. This is because the membership interests in each IC are deemed to have vested in ASIC from deregistration of the DC that holds a direct interest in the IC and only revest from the reinstatement of the DC such that each IC fails to be a wholly-owned subsidiary of ABC Limited during the period of deregistration.

Therefore, even on the reinstatement of the relevant DCs that hold direct and indirect interests in a IC, ABC Limited cannot for the purposes of the SER in section 701-1 of the ITAA 1997 treat these ICs as having been members of the ABC Limited consolidated group since 1 July 20xx. Instead, the earliest time the ICs are able to satisfy the membership requirements to be members of the ABC Limited consolidated group is the date of the reinstatement of the DCs which held direct and indirect interests in the ICs.