We’re seeking feedback on Draft Taxation Determination TD 2023/D2 Income tax: aggregated turnover and connected entities – Commissioner’s discretion that an entity does not ‘control’ another entity.
The draft guidance addresses specific issues that arise when we consider whether to exercise the Commissioner’s discretion to determine that one entity (the first entity) doesn’t ‘control’ another entity (the test entity).
The question of ‘control’ is central to determining who is connected with you. These connected or affiliated entities may be based in Australia or overseas.
Your aggregated turnover is your annual turnover, plus the annual turnovers of any business entities that are your affiliates or connected with you.
There are a number of tax concessions where the eligibility is based on your aggregated turnover being below certain aggregated turnover thresholds.
The Commissioner has the discretion to determine that the first entity doesn’t control the test entity if the control percentage is at least 40%, but less than 50%.
The draft Determination outlines that:
- we can only exercise the Commissioner’s discretion to ignore a taxpayer’s control interest in the test entity, if we think that another entity (or entities), actually controls that test entity
- responsibility for day-to-day conduct of the test entity’s business doesn’t amount to actual control of the test entity
- mere identification of a group of unrelated entities, together having a control percentage of more than 50% in the test entity, doesn’t necessarily mean that group controls the test entity.
You are invited to comment on the draft, including the proposed date of effect, by sending your feedback to the email address provided in TD 2023/D2. Comments are due by 28 July 2023.
Review draft guidance about the Commissioner’s discretion to determine that one entity doesn’t control another.