Commonwealth Consolidated Acts Commonwealth Consolidated ActsPart 1 -- Amendment of the Taxation Administration Act 1953
1 Subsection 45 - 120(2A) in Schedule 1
Repeal the subsection, substitute:
(2A) The instalment income of a * life insurance company for a period also includes any part of its * statutory income that:
(a) is reasonably attributable to that period; and
(b) is included in the * complying superannuation class of its taxable income for the income year that is or includes that period.
2 After section 45 - 155 in Schedule 1
Insert:
45 - 160 Head company of a consolidated group stops being annual payer
(1) You stop being an * annual payer at the start of an * instalment quarter if Subdivision 45 - Q starts applying to you as the * head company of a * consolidated group during that quarter.
(2) You must pay an instalment for that * instalment quarter and later instalment quarters in accordance with Subdivision 45 - B.
(3) You may again become an * annual payer if:
(a) you again satisfy the conditions in section 45 - 140; and
(b) you again choose under that section to pay instalments annually.
Note: You cannot choose to be an annual payer while you are the head company of a consolidated group to which Subdivision 45 - Q applies: see section 45 - 720.
3 At the end of section 45 - 330 in Schedule 1
Add:
Special rule for a life insurance company that is, or has been, the head company of a consolidated group
(4) A company's adjusted taxable income for the * base year is worked out under subsection ( 3) with the modification set out in subsection ( 5) if the company:
(a) is a * life insurance company for the base year; and
(b) has * tax losses transferred to it under Subdivision 707 - A of the Income Tax Assessment Act 1997 .
(5) Subsection ( 3) applies to the company as if step 4 of the method statement in that subsection were replaced by the following step:
Step 4. Reduce the step 3 result by the lesser of the following amounts:
(a) the amount of any * tax loss, to the extent that the company can carry it forward to the next income year;
(b) the amount of the deductions for tax losses used in making the * base assessment.
Note: Subsections ( 3), (4) and (5) also apply to the head company of a consolidated group, or the head company of a MEC group, that is treated as a life insurance company: see section 713 - 505 of the Income Tax Assessment Act 1997 .
4 Section 45 - 700 in Schedule 1 (notes)
Repeal the notes, substitute:
Note 1: Subdivision 45 - R contains special rules that apply to members of a consolidated group before they are treated as a single entity for the purposes of this Part. It also contains special rules that affect the operation of this Subdivision (see sections 45 - 880 and 45 - 885).
Note 2: Subdivision 45 - S extends the operation of this Subdivision so that it can apply to members of a MEC group. It contains modifications of this Subdivision for the purposes of that extended operation.
5 Section 45 - 705 in Schedule 1
Repeal the section, substitute:
45 - 705 Application of Subdivision to head company
Period during which Subdivision applies to head company
(1) Subject to sections 45 - 880 and 45 - 885, this Subdivision applies to a company as the * head company of a * consolidated group during the period:
(a) starting at the start of the * instalment quarter of the company determined under subsection ( 2), (3) or (4); and
(b) ending:
(i) at the end of the instalment quarter of the company determined under paragraph ( 5)(a) or (b); or
(ii) just before the instalment quarter of the company determined under paragraph ( 5)(c) or (d).
When the period begins--initial head company instalment rate
(2) This Subdivision starts to apply to a company as the * head company of a * consolidated group at the start of an * instalment quarter under this subsection if, during that quarter, the Commissioner gives the company (as that head company) the * initial head company instalment rate.
Note: The operation of this subsection may be affected by section 45 - 885.
When the period begins--group created from MEC group
(3) This Subdivision starts to apply to a company as the * head company of a * consolidated group at the start of an * instalment quarter (the starting quarter ) under this subsection if all of the following conditions are satisfied:
(a) the consolidated group is * created from a * MEC group during the starting quarter;
(b) the company is the head company of the consolidated group when the consolidated group is created from the MEC group;
(c) either of the following applies:
(i) this Subdivision applied, in accordance with Subdivision 45 - S, to the * provisional head company of the MEC group at the end of the previous instalment quarter;
(ii) the Commissioner gives the * initial head company instalment rate to the provisional head company of the MEC group during the starting quarter.
Note: For the application of this Subdivision to a provisional head company of a MEC group: see section 45 - 915.
When the period begins--new head company
(4) This Subdivision starts to apply to a company as the * head company of a * consolidated group at the start of an * instalment quarter (the starting quarter ) under this subsection if all of the following conditions are satisfied:
(a) the company is an interposed company mentioned in subsection 124 - 380(5) of the Income Tax Assessment Act 1997 ;
(b) the company chooses under that subsection that the consolidated group is to continue in existence at and after the completion time mentioned in that subsection;
(c) the completion time occurs during the starting quarter;
(d) one of the following subparagraphs applies:
(i) this Subdivision applied to the original company mentioned in that subsection ( as the head company of the consolidated group) at the end of the previous instalment quarter;
(ii) the Commissioner gives the * initial head company instalment rate to the original company mentioned in that subsection ( as the head company of the consolidated group) during the starting quarter;
(iii) the consolidated group is * created from a * MEC group during the starting quarter and this Subdivision applied to the * provisional head company of the MEC group at the end of the previous instalment quarter;
(iv) the consolidated group is created from a MEC group during the starting quarter and the Commissioner gives the initial head company instalment rate to the provisional head company of the MEC group during the starting quarter.
When the period ends
(5) This Subdivision stops applying to a company as the * head company of a * consolidated group at the earliest of the following times after the company becomes the head company:
(a) the end of the * instalment quarter during which the consolidated group ceases to exist (other than because a * MEC group is * created from the consolidated group);
(b) the end of the instalment quarter during which the Commissioner is notified of the creation of a MEC group from the consolidated group if the MEC group is created during that instalment quarter;
(c) just before the instalment quarter during which the Commissioner is notified of the creation of a MEC group from the consolidated group if the MEC group was created before that instalment quarter;
(d) just before the instalment quarter that includes the completion time mentioned in subsection 124 - 380(5) of the Income Tax Assessment Act 1997 where an interposed company mentioned in that subsection chooses under that subsection that the consolidated group is to continue in existence.
Note: The operation of this subsection because of paragraph ( a) may be affected by section 45 - 880.
(6) For the purposes of subsection ( 5), the Commissioner is notified of the creation of a * MEC group from a * consolidated group when the Commissioner receives a notice of the consolidation of the MEC group under subsection 719 - 40(1) of the Income Tax Assessment Act 1997 .
(7) If this Subdivision stops applying to a company as the * head company of a * consolidated group just before an * instalment quarter under paragraph ( 5)(c), then, for the purposes of this Part, this Act has effect for the company and other * members of the group as if:
(a) the consolidated group had continued to exist until just before the start of that quarter; and
(b) the company were the head company of the group until just before the start of that quarter.
(8) To avoid doubt, this Subdivision does not apply to a company as the * head company of a * consolidated group for any time at all if:
(a) subsection ( 2), (3) or (4), and subsection ( 5), would, apart from this subsection, apply to the company; but
(b) the time at which this Subdivision would stop applying to the company under subsection ( 5) is before the time at which this Subdivision would start to apply to the company under subsection ( 2), (3) or (4).
(9) To avoid doubt, and apart from the operation of subsection ( 7), this Subdivision may apply to a company as the * head company of a * consolidated group at a time when the company is not in fact the head company of the group.
Note: An example of this is when an interposed company becomes the new head company of a consolidated group. Under this section and section 45 - 740, this Subdivision may start applying to the company as if it had already become the head company when it is not yet such a company.
6 Section 45 - 720 in Schedule 1 (link note)
Repeal the link note, substitute:
Note: You stop being an annual payer when this Subdivision starts applying to you as the head company of a consolidated group: see section 45 - 160.
7 Before section 45 - 755 in Schedule 1
Insert (after the group heading):
45 - 740 Change of head company
Object
(1) The object of this section (except subsection ( 8)) is to ensure that, for the purposes of this Part, when a company becomes the new * head company of a * consolidated group:
(a) the company inherits the history of the former head company of the group; and
(b) the history of the new head company is effectively ignored.
(2) This section applies to a * head company of a * consolidated group if:
(a) the company is an interposed company mentioned in subsection 45 - 705(4) (an interposed company that chooses under subsection 124 - 380(5) of the Income Tax Assessment Act 1997 that the consolidated group is to continue in existence at and after the completion time mentioned in that subsection); and
(b) the conditions in subsection 45 - 705(4) are satisfied in relation to the interposed company (whether or not this Subdivision applies to the company as the head company of the group for any period of time).
(3) Everything that happened before the completion time in relation to the company (the original company ) that was the * head company of the * consolidated group immediately before the completion time:
(a) is taken to have happened in relation to the interposed company instead of in relation to the original company; and
(b) is taken to have happened in relation to the interposed company instead of what would (apart from this section) be taken to have happened in relation to the interposed company before the completion time;
just as if, at all times before the completion time:
(c) the interposed company had been the original company; and
(d) the original company had been the interposed company.
(4) To avoid doubt, subsection ( 3) also covers everything that, immediately before the completion time, was taken to have happened in relation to the original company because of:
(a) section 701 - 1 of the Income Tax Assessment Act 1997 (single entity rule); or
(b) section 701 - 5 of that Act (entry history rule); or
(c) section 703 - 75 of that Act (effects of an interposed company becoming the * head company of a * consolidated group); or
(d) section 719 - 90 of that Act (effects of a change of head company of a * MEC group); or
(e) section 45 - 710 in this Schedule (single entity rule for the purposes of this Part), including an application of that section under Subdivision 45 - S in this Schedule; or
(f) this section; or
(g) section 45 - 920 in this Schedule (effects of a change of * provisional head company of a MEC group for the purposes of this Part); or
(h) one or more previous applications of any of the provisions covered by paragraphs ( a) to (g).
(5) In addition, and without affecting subsection ( 3):
(a) an assessment of the original company for an income year that ends before the income year that includes the completion time; or
(b) an amendment of the assessment;
is taken to be something that had happened to the interposed company, whether or not the assessment or amendment is made before the completion time.
(6) This section has effect for the purposes of applying this Part to * members of the * consolidated group in relation to an * instalment quarter of the interposed company that ends after the completion time.
Note: An assessment mentioned in subsection ( 5) may therefore be taken to be the base assessment of the interposed company for the purposes of this Part.
(7) Subsections ( 1) to (6) are to be disregarded in applying section 45 - 705 (about the application of this Subdivision to a company as the * head company of a * consolidated group).
Note: For example, if the Commissioner has given an initial head company instalment rate to the original company during an earlier instalment quarter, the rate is not, despite this section, treated as if it had been given to the interposed company for the purposes of section 45 - 705. Subject to the other provisions in that section, this Subdivision therefore starts applying to the interposed company under subsection 45 - 705(4).
Special rule for the original company
(8) A provision of this Part that applies on an entity becoming a * subsidiary member of a * consolidated group does not apply to the original company when it is taken to have become such a member at the completion time as a result of section 703 - 70 of the Income Tax Assessment Act 1997 .
Note: Section 45 - 755 (the entry rule) therefore does not apply to the original company on the company becoming a subsidiary member of the consolidated group.
8 Subsection 45 - 760(1) in Schedule 1
Repeal the subsection, substitute:
(1) This section applies to an entity if all of the following conditions are satisfied:
(a) the entity ceases to be a * subsidiary member of a * consolidated group during an * instalment quarter of the * head company of the group;
(b) this Subdivision applies to the head company of the group during that instalment quarter;
(c) the entity does not, at the time it ceases to be a subsidiary member of the group, become:
(i) a subsidiary member of another consolidated group the head company of which is one to which this Subdivision applies at that time; or
(ii) a member (other than the * provisional head company) of a * MEC group the provisional head company of which is one to which this Subdivision applies, in accordance with Subdivision 45 - S, at that time;
(d) this Part applies to the entity under section 45 - 10.
9 At the end of section 45 - 775 in Schedule 1
Add:
Additional applications of subsection ( 2)
(4) If, after exercising the power in relation to the membership change under subsection ( 2) for the first time, and on the basis of an assessment (including an amendment) of the * head company for the income year in which the change occurs, or for an earlier year, the Commissioner has worked out:
(a) another instalment rate under section 45 - 320 for the company (whether or not the Commissioner has given that rate to the company); or
(b) another amount of * GDP - adjusted notional tax under section 45 - 405 for the company (whether or not the Commissioner has notified the company an amount of instalment based on that other amount);
the Commissioner may again exercise the power under subsection ( 2) in relation to the membership change, as if:
(c) the rate mentioned in paragraph ( a) were the most recent instalment rate mentioned in paragraph ( 2)(a); and
(d) the amount of GDP - adjusted notional tax mentioned in paragraph ( b) were the amount of GDP - adjusted notional tax worked out for the purposes of the most recent amount of instalment that is mentioned in paragraph ( 2)(b).
(5) To avoid doubt, in relation to the membership change, the Commissioner:
(a) may exercise the power under subsection ( 2) by applying subsection ( 4) more than once; but
(b) must not exercise that power more than once in relation to a particular instalment rate mentioned in paragraph ( 4)(a) or a particular amount of * GDP - adjusted notional tax mentioned in paragraph ( 4)(b).
10 Subdivision 45 - R in Schedule 1 (heading)
Repeal the heading, substitute:
Subdivision 45 - R -- Special rules for consolidated groups
11 Section 45 - 850 in Schedule 1
Repeal the section, substitute:
45 - 850 What this Subdivision is about
This Subdivision deals with the application of this Part to members of a consolidated group after the group has come into existence but before the members are treated as a single entity for the purposes of this Part.
This Subdivision also contains special rules in relation to the application of Subdivision 45 - Q to members of a consolidated group in these circumstances:
(a) a group whose members were treated as a single entity under that Subdivision (a mature group ) is acquired by another group (see section 45 - 880); or
(b) a member of a mature group ceases to be such a member and becomes the head company of a new group (see section 45 - 885).
Note: Subdivision 45 - S extends the operation of this Subdivision so that it can apply to members of a MEC group. It contains modifications of this Subdivision for the purposes of that extended operation.
12 Paragraph 45 - 855(b) in Schedule 1
Repeal the paragraph, substitute:
(b) the period ends before Subdivision 45 - Q starts to apply, because of subsection 45 - 705(2) or subparagraph 45 - 705(3)(c)(ii), (4)(d)(ii) or (iv), to the * head company of the group;
13 Paragraphs 45 - 860(1)(a) and (2)(a) in Schedule 1
Omit "during which Subdivision 45 - Q starts to apply to the * head company of the group", substitute "that includes the starting time".
14 Paragraphs 45 - 860(1)(b) and (2)(b) in Schedule 1
Omit "the head company during which that Subdivision starts to apply to the head company", substitute "the * head company of the group that includes the starting time".
15 Paragraph 45 - 860(3)(a) in Schedule 1
Omit "Subdivision 45 - Q starts to apply to the * head company of the group", substitute "the starting time".
16 At the end of section 45 - 860 in Schedule 1
Add:
(4) For the purposes of this section, the starting time is the time at which Subdivision 45 - Q starts to apply to the * head company of the group because of subsection 45 - 705(2) or subparagraph 45 - 705(3)(c)(ii), (4)(d)(ii) or (iv).
17 At the end of section 45 - 865 in Schedule 1
Add:
(3) To avoid doubt, if:
(a) during the * instalment quarter or the * consolidation transitional year mentioned in paragraph ( 2)(a), the entity is a * subsidiary member of:
(i) 2 or more * consolidated groups; or
(ii) one or more consolidated groups and one or more * MEC groups; and
(b) an amount is taken into account under that paragraph or paragraph ( 2)(b) in working out the credit to which the * head company of one of the groups is entitled under subsection ( 1);
that amount is not to be taken into account in working out the credit to which the head company of another of those groups is entitled under that subsection.
(4) A reference in subsection ( 3) to subsection ( 1) or paragraph ( 2)(a) or (b) includes a reference to that provision in its extended operation in relation to a * MEC group under Subdivision 45 - S.
Note: This section applies to members of a MEC group with the modifications set out in section 45 - 930.
18 At the end of Subdivision 45 - R in Schedule 1
Add:
45 - 880 Continued application of Subdivision 45 - Q to the head company of an acquired group
(1) This section applies to a company for which all of the following conditions are satisfied in relation to a particular time (the takeover time ):
(a) just before the takeover time, Subdivision 45 - Q applied to the company as the * head company of a * consolidated group;
(b) at the takeover time, the company becomes a * wholly - owned subsidiary of a * member of another consolidated group or * MEC group;
(c) that other group is consolidated at or before the takeover time under section 703 - 50 or 719 - 50 of the Income Tax Assessment Act 1997 ;
(d) the Commissioner receives the choice (or notice) under that section for the consolidation of that other group not later than 28 days after the takeover time, or within such further period (if any) as the Commissioner allows;
(e) at the takeover time, Subdivision 45 - Q (including that Subdivision as applied under Subdivision 45 - S) does not apply to the head company or the * provisional head company of that other group.
(2) For the purposes of this Part only, this Act has effect in relation to the company and the other * members of the * consolidated group mentioned in paragraph ( 1)(a) (the preserved group ) as if, during the period covered by subsection ( 5):
(a) the preserved group had continued to exist as a consolidated group; and
(b) the company were still the * head company of the preserved group; and
(c) Subdivision 45 - Q had continued to apply to the company as the head company of the preserved group; and
(d) an entity, while being a * subsidiary member of the preserved group, were not treated as a member of the group mentioned in paragraph ( 1)(b) (the new group ).
(3) Subsection ( 2) does not stop the company from being a member of the new group for the purposes of this Part during the period covered by subsection ( 5).
Note: This means, for example, sections 45 - 855 and 45 - 860 apply to the head company as a member of the new group.
(4) However, for the purposes of applying section 45 - 855 to the company, a reference in that section to an application of section 701 - 1 of the Income Tax Assessment Act 1997 to the company in relation to the period mentioned in section 45 - 855 is taken to be:
(a) a reference only to an application of section 701 - 1 of that Act to the company as a member of the new group during that period; and
(b) not a reference to an application (because of subsection ( 2) of this section) of section 701 - 1 of that Act to the company as the * head company of the preserved group during that period.
(5) This subsection covers the period that starts from the start of the * instalment quarter of the company that includes the takeover time and ends at the earlier of the following times:
(a) the end of the instalment quarter of the company during which the company ceases to be a member of the new group;
(b) just before the instalment quarter of the company during which the Commissioner gives the * initial head company instalment rate to the * head company, or the * provisional head company, of the new group.
(6) The Commissioner may, on the application of the company made not later than 28 days after the takeover time, allow such extension of time for the purposes of paragraph ( 1)(d) as he or she considers appropriate.
(7) To avoid doubt, nothing in this section prevents the operation of section 45 - 755 or 45 - 760 to * members of the preserved group while it continues to exist under subsection ( 2).
45 - 885 Early application of Subdivision 45 - Q to the head company of a new group
(1) This section applies to a company for which all of the following conditions are satisfied in relation to a particular time (the starting time ):
(a) just before the starting time, the company was a * subsidiary member of a * consolidated group, or a member of a * MEC group;
(b) just before the starting time, the consolidated group or MEC group was a mature group (see subsection ( 4));
(c) at the starting time, either of the following applies:
(i) the company ceases to be a subsidiary member of the consolidated group, or a member of the MEC group;
(ii) the group ceases to exist (otherwise than because a MEC group or consolidated group is * created from the group, or because its * head company or * provisional head company becomes a * wholly - owned subsidiary of a member of another mature group);
(d) at the starting time, the company is the head company of another consolidated group;
(e) within 28 days after the starting time, or within such further period (if any) as the Commissioner allows, the Commissioner receives the choice to consolidate, at and after the starting time, that other consolidated group under section 703 - 50 of the Income Tax Assessment Act 1997 .
(2) For the purposes of this Part:
(a) the instalment rate that the Commissioner is taken to have given to the company under paragraph 45 - 760(2)(a) has effect as if it were the * initial head company instalment rate for the company as the * head company of the * consolidated group mentioned in paragraph ( 1)(d); and
(b) an instalment rate that would otherwise be the initial head company instalment rate for the company as the head company of that consolidated group is not to be treated as that initial head company instalment rate.
Note: This means, subject to the provisions in section 45 - 705, Subdivision 45 - Q starts applying to the company as the head company of the consolidated group at the start of the instalment quarter that includes the starting time: see subsection ( 2) of that section and paragraph 45 - 760(2)(a).
(3) The Commissioner may, on the application of the company made within 28 days after the starting time, allow such extension of time for the purposes of paragraph ( 1)(e) as he or she considers appropriate.
Mature group
(4) For the purposes of this section, a * consolidated group or a * MEC group is a mature group at a particular time if:
(a) for a consolidated group--Subdivision 45 - Q applies to its * head company at that time; or
(b) for a MEC group--Subdivision 45 - Q, as applied under Subdivision 45 - S, applies to its * provisional head company at that time.
Subdivision 45 - S -- MEC groups
45 - 900 What this Subdivision is about
This Subdivision sets out how this Part applies in relation to MEC groups and their members.
Table of sections
Preliminary
45 - 905 Objects of Subdivision
General modification rules
45 - 910 Extended operation of Part to cover MEC groups
Extended operation of Subdivision 45 - Q
45 - 913 Sections 45 - 705 and 45 - 740 do not apply to members of MEC groups
45 - 915 Application of Subdivision 45 - Q to provisional head company
45 - 917 Assumption for applying section 45 - 710 (single entity rule)
45 - 920 Change of provisional head company
45 - 922 Life insurance company
Extended operation of Subdivision 45 - R
45 - 925 Additional modifications of sections 45 - 855 and 45 - 860
45 - 930 Modifications of sections 45 - 865 and 45 - 870 and a related provision
45 - 935 Additional modifications of section 45 - 885
[This is the end of the Guide.]
45 - 905 Objects of Subdivision
The objects of this Subdivision are to:
(a) extend the operation of this Part (except sections 45 - 705 and 45 - 740 and this Subdivision) so that it can apply in relation to * MEC groups and their members; and
(b) modify the rules in this Part for that extended operation so that they take account of the special characteristics of MEC groups.
45 - 910 Extended operation of Part to cover MEC groups
(1) This Part (except sections 45 - 705 and 45 - 740 and this Subdivision) has effect in relation to members of a * MEC group in the same way in which it has effect in relation to * members of a * consolidated group.
(2) However, that effect is subject to the modifications set out in the following table and elsewhere in this Subdivision.
Modifications of this Part | ||
Item | A reference in this Part to: | Is taken to be a reference to: |
1 | a * consolidated group | a * MEC group |
2 | the * head company of a * consolidated group | the * provisional head company of a * MEC group |
3 | a * subsidiary member of a * consolidated group | a member (other than the * provisional head company) of a * MEC group |
Exceptions
(3) The modifications set out in the table do not apply to the following provisions:
(a) this Subdivision;
(b) subsection 45 - 30(4) (see section 45 - 930);
(c) the note at the end of subsection 45 - 330(5);
(d) note 2 at the end of section 45 - 700;
(e) sections 45 - 705 and 45 - 740 (see sections 45 - 913, 45 - 915 and 45 - 920);
(f) subparagraphs 45 - 760(1)(c)(i) and (ii);
(g) the note at the end of section 45 - 850;
(h) sections 45 - 865 and 45 - 870 (see section 45 - 930);
(i) paragraphs ( 1)(b), (c), (d) and (e), and subsection ( 5), of section 45 - 880;
(j) paragraphs ( 1)(a), (b) and (c), and subsection ( 4), of section 45 - 885.
Note: The provisions covered by paragraphs ( c), (d), (f), (g), (i) and (j) apply to members of a MEC group without any modifications.
Extended operation of Subdivision 45 - Q
45 - 913 Sections 45 - 705 and 45 - 740 do not apply to members of MEC groups
In applying Subdivision 45 - Q to members of a * MEC group, the Subdivision has effect as if:
(a) section 45 - 705 had no effect and section 45 - 915 had effect instead; and
(b) section 45 - 740 had no effect and section 45 - 920 had effect instead.
45 - 915 Application of Subdivision 45 - Q to provisional head company
Period during which Subdivision applies to provisional head company
(1) Subject to sections 45 - 880 and 45 - 885 (as applied under this Subdivision), Subdivision 45 - Q applies to a company as the * provisional head company of a * MEC group during the period:
(a) starting at the start of the * instalment quarter of the company determined under subsection ( 2), (3) or (4); and
(b) ending:
(i) at the end of the instalment quarter of the company determined under paragraph ( 6)(a) or (b); or
(ii) just before the instalment quarter of the company determined under paragraph ( 6)(c).
Note: The application of Subdivision 45 - Q to the provisional head company is subject to the modifications set out in this section and elsewhere in this Subdivision.
When the period begins--initial head company instalment rate
(2) Subdivision 45 - Q starts to apply to a company as the * provisional head company of a * MEC group at the start of an * instalment quarter under this subsection if, during that quarter, the Commissioner gives the company (as that provisional head company) the * initial head company instalment rate.
Note: The operation of this subsection may be affected by section 45 - 885 (as applied under this Subdivision).
When the period begins--group created from consolidated group
(3) Subdivision 45 - Q starts to apply to a company as the * provisional head company of a * MEC group at the start of an * instalment quarter (the starting quarter ) under this subsection if all of the following conditions are satisfied:
(a) during the starting quarter, the Commissioner is notified of the creation of the MEC group from a * consolidated group (see subsection ( 5));
(b) the company is the provisional head company of the MEC group when the Commissioner is so notified;
(c) either of the following applies:
(i) Subdivision 45 - Q applied to the * head company of the consolidated group at the end of the previous instalment quarter;
(ii) the Commissioner gives the * initial head company instalment rate to the head company of the consolidated group during the starting quarter.
Note: For the application of Subdivision 45 - Q to a head company of a consolidated group: see section 45 - 705.
When the period begins--new provisional head company
(4) Subdivision 45 - Q starts to apply to a company as the * provisional head company of a * MEC group at the start of an * instalment quarter (the starting quarter ) under this subsection if both of the following conditions are satisfied:
(a) the company is appointed as the provisional head company of the MEC group under subsection 719 - 60(3) of the Income Tax Assessment Act 1997 during the starting quarter;
(b) one of the following applies:
(i) Subdivision 45 - Q applied to the former provisional head company of the MEC group at the end of the previous instalment quarter;
(ii) the Commissioner gives the * initial head company instalment rate to the former provisional head company of the MEC group during the starting quarter;
(iii) the Commissioner is notified during the starting quarter of the creation of the MEC group from a * consolidated group and Subdivision 45 - Q applied to the * head company of the consolidated group at the end of the previous instalment quarter;
(iv) the Commissioner is notified during the starting quarter of the creation of the MEC group from a consolidated group and the Commissioner gives the initial head company instalment rate to the head company of the consolidated group during the starting quarter.
Notification of creation of MEC group from consolidated group
(5) For the purposes of subsections ( 3) and (4), the Commissioner is notified of the creation of a * MEC group from a * consolidated group when the Commissioner receives a notice of the consolidation of the MEC group under subsection 719 - 40(1) of the Income Tax Assessment Act 1997 .
When the period ends
(6) Subdivision 45 - Q stops applying to a company as the * provisional head company of a * MEC group at the earliest of the following times after the company becomes the provisional head company:
(a) the end of the * instalment quarter during which the MEC group ceases to exist (other than because a * consolidated group is * created from the MEC group);
(b) the end of the instalment quarter during which a consolidated group is created from the MEC group;
(c) just before the instalment quarter during which another company is appointed as the provisional head company of the MEC group under subsection 719 - 60(3) of the Income Tax Assessment Act 1997 .
Note: The operation of this subsection because of paragraph ( a) may be affected by section 45 - 880 (as applied under this Subdivision).
(7) To avoid doubt, Subdivision 45 - Q does not apply to a company as the * provisional head company of a * MEC group for any time at all if:
(a) subsection ( 2), (3) or (4), and subsection ( 6), would, apart from this subsection, apply to the company; but
(b) the time at which Subdivision 45 - Q would stop applying to the company under subsection ( 6) is before the time at which that Subdivision would start to apply to the company under subsection ( 2), (3) or (4).
(8) To avoid doubt, Subdivision 45 - Q may apply to a company as the * provisional head company of a * MEC group at a time when the company is not in fact the provisional head company of the group.
Note: An example of this is when a company replaces another company as the provisional head company of a MEC group. Under this section and section 45 - 920, Subdivision 45 - Q may start applying to the company as if it had already become the provisional head company when it is not yet such a company.
45 - 917 Assumption for applying section 45 - 710 (single entity rule)
In applying section 45 - 710 to members of a * MEC group at a particular time, the company that is the * provisional head company of the group at that time must be assumed to be the * head company of the group at all times during the period:
(a) throughout which the group is in existence; and
(b) that is all or a part of the income year of the company that includes that particular time.
45 - 920 Change of provisional head company
Object
(1) The object of this section (except subsection ( 9)) is to ensure that, for the purposes of this Part, when a company becomes the new * provisional head company of a * MEC group:
(a) the company inherits the history of the former provisional head company; and
(b) the history of the new provisional head company is effectively ignored.
(2) This section applies to a * provisional head company of a * MEC group (the new provisional head company ) that is appointed under subsection 719 - 60(3) of the Income Tax Assessment Act 1997 if one of the following conditions is satisfied:
(a) the conditions in subsection 45 - 915(4) are satisfied in relation to the new provisional head company (whether or not Subdivision 45 - Q applies to the company as the provisional head company of the group for any period of time);
(b) the new provisional head company is so appointed during the * instalment quarter of the company in which the MEC group is * created from a * consolidated group and either:
(i) the Commissioner gives the * initial head company instalment rate to the * head company of the consolidated group during that instalment quarter; or
(ii) Subdivision 45 - Q applied to the head company of the consolidated group at the end of the previous instalment quarter.
(3) Everything that happened before the starting time in relation to the company (the former company ) that was the * provisional head company of the * MEC group immediately before the starting time:
(a) is taken to have happened in relation to the new provisional head company instead of in relation to the former company; and
(b) is taken to have happened in relation to the new provisional head company instead of what would (apart from this section) be taken to have happened in relation to the new provisional head company before the starting time;
just as if, at all times before the starting time:
(c) the new provisional head company had been the former company; and
(d) the former company had been the new provisional head company.
(4) For the purposes of this section, the starting time is the time at which the * cessation event happened to the former company (the event that results in the appointment of the new provisional head company).
(5) To avoid doubt, subsection ( 3) also covers everything that, immediately before the starting time, was taken to have happened in relation to the former company because of:
(a) section 701 - 1 of the Income Tax Assessment Act 1997 (single entity rule); or
(b) section 701 - 5 of that Act (entry history rule); or
(c) section 703 - 75 of that Act (effects of an interposed company becoming the * head company of a * consolidated group); or
(d) section 719 - 90 of that Act (effects of a change of head company of a * MEC group); or
(e) section 45 - 710 in this Schedule (single entity rule for the purposes of this Part), including an application of that section under this Subdivision; or
(f) section 45 - 740 in this Schedule (effects of an interposed company becoming the head company of a consolidated group for the purposes of this Part); or
(g) this section; or
(h) one or more previous applications of any of the provisions covered by paragraphs ( a) to (g).
(6) In addition, and without affecting subsection ( 3):
(a) an assessment of the former company for an income year that ends before the income year that includes the starting time; or
(b) an amendment of the assessment;
is taken to be something that had happened to the new provisional head company, whether or not the assessment or amendment is made before the starting time.
(7) This section has effect for the purposes of applying this Part to members of the * MEC group in relation to an * instalment quarter of the new provisional head company that ends after the starting time.
Note: An assessment mentioned in subsection ( 6) may therefore be taken to be the base assessment of the new provisional head company for the purposes of this Part.
(8) Subsections ( 1) to (7) are to be disregarded in applying section 45 - 915 (about the application of Subdivision 45 - Q to a company as the * provisional head company of a * MEC group).
Note: For example, if the Commissioner has given an initial head company instalment rate to the former company during an earlier instalment quarter, the rate is not, despite this section, treated as if it had been given to the new provisional head company for the purposes of section 45 - 915. Subject to the other provisions in that section, Subdivision 45 - Q therefore starts applying to the new provisional head company under subsection 45 - 915(4).
Special rule for the former company
(9) A provision of this Part that applies on an entity becoming a member (other than the * provisional head company) of a * MEC group does not apply to the former company when it becomes such a member at the starting time.
Note: Section 45 - 755 (the entry rule, as applied under this Subdivision) therefore does not apply to the former company on the company becoming such a member of the MEC group.
45 - 922 Life insurance company
In applying Subdivision 45 - Q to members of a * MEC group for an * instalment quarter of the * provisional head company of the group in an income year of the provisional head company, the company is taken to be a * life insurance company for that quarter if:
(a) one or more life insurance companies are members of the group at any time during that quarter; or
(b) one or more life insurance companies were members of the group at any time during a previous instalment quarter of the company in that year.
Extended operation of Subdivision 45 - R
45 - 925 Additional modifications of sections 45 - 855 and 45 - 860
In applying sections 45 - 855 and 45 - 860 to members of a * MEC group, those sections have effect as if, in addition to the modifications set out in the table in section 45 - 910:
(a) a reference in those sections to subsection 45 - 705(2) were a reference to subsection 45 - 915(2); and
(b) a reference in those sections to subparagraph 45 - 705(3)(c)(ii), (4)(d)(ii) or (iv) were a reference to subparagraph 45 - 915(3)(c)(ii), (4)(b)(ii) or (iv).
45 - 930 Modifications of sections 45 - 865 and 45 - 870 and a related provision
(1) In applying sections 45 - 865 and 45 - 870, and subsection 45 - 30(4) (which is related to section 45 - 865), to members of a * MEC group, those provisions have effect as if:
(a) a reference in those provisions to a * consolidated group were a reference to a * MEC group; and
(b) a reference in those provisions to a MEC group were a reference to a consolidated group.
Note: This means a reference in those provisions to the head company of a consolidated group has effect as if it were a reference to the head company of a MEC group. Similarly, a reference in those provisions to a subsidiary member of a consolidated group has effect as if it were a reference to a subsidiary member of a MEC group.
(2) However, the modifications in subsection ( 1) do not apply to subsection 45 - 865(4) and the note at the end of section 45 - 865.
Note: This means subsection 45 - 865(4) and the note apply to members of a MEC group without any modifications.
45 - 935 Additional modifications of section 45 - 885
In applying section 45 - 885 to members of a * MEC group, that section has effect as if, in addition to the modifications set out in the table in section 45 - 910, it had been modified as set out in the following table:
Modifications of section 45 - 885 | ||
Item | Provision: | Modification: |
1 | Paragraph 45 - 885(1)(e) | The paragraph is taken to have been replaced by the following paragraph: (e) within 28 days after the starting time, or within such further period (if any) as the Commissioner allows, the Commissioner receives a notice of the consolidation of that other MEC group, at and after the starting time, under section 719 - 50 of the Income Tax Assessment Act 1997 . |
2 | Subsection 45 - 885(2) (including the note at the end of the subsection) | A reference to paragraph 45 - 760(2)(a) is taken to be a reference to that paragraph as applied under this Subdivision |
3 | The note at the end of subsection 45 - 885(2) | The reference to section 45 - 705 is taken to be a reference to section 45 - 915 |
19 Application of amendments
(1) The amendment made by item 1 applies only in relation to an income year that begins on or after 1 July 2003.
(2) The amendments made by items 2 to 18 apply on and after 1 July 2002.
Part 2 -- Amendment of the Income Tax Assessment Act 1997
20 Subsection 995 - 1(1) (definition of consolidation transitional year )
Repeal the definition, substitute:
"consolidation transitional year" for a * member of a * consolidated group or a member of a * MEC group, is an income year for that member that satisfies both of the following conditions:
(a) the group is in existence during all or any part of that year;
(b) Subdivision 45 - Q in Schedule 1 to the Taxation Administration Act 1953 (including that Subdivision as applied under Subdivision 45 - S in that Schedule):
(i) does not apply at all to the * head company or the * provisional head company of the group during that year; or
(ii) starts to apply at any time during that year to the head company or the provisional head company of the group because of subsection 45 - 705(2) or subparagraph 45 - 705(3)(c)(ii), (4)(d)(ii) or (iv), or subsection 45 - 915(2) or subparagraph 45 - 915(3)(c)(ii), (4)(b)(ii) or (iv), in that Schedule.
21 Subsection 995 - 1(1)
Insert:
"created" :
(a) a * consolidated group is created from a * MEC group if the consolidated group comes into existence under section 703 - 55 at the time the MEC group ceases to exist (as mentioned in that section); and
(b) a MEC group is created from a consolidated group if:
(i) the MEC group comes into existence under section 719 - 40 when a * special conversion event happens to a * potential MEC group derived from an * eligible tier - 1 company of a * top company; and
(ii) the eligible tier - 1 company was the * head company of the consolidated group (as mentioned in paragraph 719 - 40(1)(b)).
22 Subsection 995 - 1(1) (definition of initial head company instalment rate )
Repeal the definition, substitute:
"initial head company instalment rate" , for a * head company of a * consolidated group, or a * provisional head company of a * MEC group, is an * instalment rate worked out on the basis of:
(a) for a group that comes into existence in an income year under section 703 - 50 or 719 - 50--the first * base assessment of a company as the head company of that group for which the * base year is that income year; and
(b) for a group (the later group ) for which either of the following conditions is satisfied:
(i) the later group is * created from a group (the first group ) that comes into existence under section 703 - 50 or 719 - 50;
(ii) starting from the first group, consolidated groups or MEC groups are successively created, ending in the creation of the later group;
the first base assessment of a company as the head company of the first group, the later group or any other group covered by subparagraph ( ii), for which the base year is the income year in which the first group comes into existence.
Note: For example, subparagraph ( b)(ii) covers a consolidated group that is created from a MEC group, which was in turn created from a consolidated group that came into existence under section 703 - 50.
23 Application of amendments
The amendments made by items 20 to 22 apply on and after 1 July 2002.