Tax Laws Amendment (Taxation of Financial Arrangements) Act 2009 (15 of 2009)
Schedule 1 Amendments
Part 2 Consequential amendments
Income Tax Assessment Act 1997
89 After Subdivision 715-D
Insert:
Subdivision 715-F - Interactions with Division 230 (financial arrangements)
Table of sections
715-375 Cost setting - amount of liability that is Division 230 financial arrangement
715-380 Exit history rule not to affect certain matters related to Division 230 financial arrangements
715-385 Exit history rule and elective methods applying to Division 230 financial arrangements
715-375 Cost setting - amount of liability that is Division 230 financial arrangement
(1) Subsection (2) applies if:
(a) an entity (the joining entity ) becomes a *subsidiary member of a *consolidated group at a time (the joining time ); and
(b) a thing (the accounting liability ) is, in accordance with *accounting standards, or statements of accounting concepts made by the Australian Accounting Standards Board, a liability of the joining entity at the joining time that can or must be recognised in the entity’s statement of financial position; and
(c) the accounting liability is or is part of a *Division 230 financial arrangement.
(2) For the purposes of Division 230, treat the *head company of the group as starting to have the accounting liability at the joining time.
(3) Subsection (4) applies if:
(a) the requirements in subsection (1) are met; and
(b) Subdivision 230-C (fair value method), Subdivision 230-D (foreign exchange retranslation method) or Subdivision 230-F (reliance on financial reports method) is to apply in relation to the accounting liability after the joining time.
(4) For as long as Subdivision 230-C, 230-D or 230-F applies in relation to the accounting liability, treat the amount of the accounting liability as its *Division 230 starting value at the joining time for the purposes of those Subdivisions and Subdivision 230-G.
715-380 Exit history rule not to affect certain matters related to Division 230 financial arrangements
Spreading fees gain or loss
(1) Subsection (2) applies if:
(a) an entity (the leaving entity ) ceases to be a *subsidiary member of a *consolidated group at a time (the leaving time ); and
(b) but for the cessation of membership and section 701-40 (the exit history rule), the *head company of the group would spread a fees gain or loss mentioned in section 230-160 over a period that ended after the leaving time.
(2) Despite section 701-40 (the exit history rule), the *head company of the *consolidated group continues to spread the fees gain or loss over that period, in accordance with section 230-160.
Assessable income and deductions under section 701-61
(3) Subsection (4) applies if:
(a) an entity (the leaving entity ) ceases to be a *subsidiary member of a *consolidated group at a time (the leaving time ); and
(b) but for the cessation of membership and section 701-40 (the exit history rule):
(i) an amount would be included in the assessable income of the *head company of the group under section 701-61 for an income year ending after the leaving time; or
(ii) the head company of the group would be entitled to a deduction under section 701-61 for an income year ending after the leaving time.
(4) Despite section 701-40 (the exit history rule), the amount is included in the assessable income of the *head company for the income year, or the head company is entitled to the deduction for the income year.
715-385 Exit history rule and elective methods applying to Division 230 financial arrangements
(1) Subsection (2) applies if:
(a) an entity (the leaving entity ) ceases to be a *subsidiary member of a *consolidated group at a time (the leaving time ); and
(b) the *head company of the group has a *Division 230 financial arrangement at the leaving time because the leaving entity is taken by subsection 701-1(1) (the single entity rule) to be a part of the head company; and
(c) after the leaving time, the leaving entity makes an election of a kind mentioned in section 230-220 (fair value method), 230-265 (foreign exchange retranslation method), 230-325 (hedging method) or 230-410 (reliance on financial reports method).
(2) For the purposes of determining whether the election applies to the financial arrangement, disregard paragraphs 230-220(1)(d), 230-265(1)(d), 230-325(a) and 230-410(1)(b)).