Petroleum Resource Rent Tax Assessment Amendment Act 2012 (18 of 2012)
Schedule 5 Consolidated groups
Part 1 Main amendments
Petroleum Resource Rent Tax Assessment Act 1987
1 At the end of Part V
Add:
Division 8 - Consolidated groups
58N Choice to consolidate
(1) A head company of a consolidated group or a MEC group or a provisional head company of a MEC group may, in writing, choose to apply this Division in relation to the group.
(2) However, subsection (1) does not apply if a notice has not been given to the Commissioner under section 703-58 or 719-76 of the Income Tax Assessment Act 1997 in relation to the group.
(3) The choice is not valid unless it is in the approved form, and the head company or the provisional head company gives it to the Commissioner:
(a) within 21 days after making the choice; or
(b) within such further period as the Commissioner allows.
(4) The choice is irrevocable, and:
(a) has effect on and after the day the choice is made; and
(b) does not have effect after the consolidated group or MEC group ceases to exist.
Note: The head company’s interests in petroleum projects just before a consolidated group or MEC group ceases to exist would be transferred at the time the group ceases to exist: see section 58R.
58P Single entity rule
(1) If a person is a subsidiary member of the consolidated group or MEC group for any period in which the choice is in effect, the person and any other subsidiary member of the group are taken for the purposes covered by subsection (2) to be parts of the head company or provisional head company of the group, rather than separate persons, during that period.
Note: Despite the single entity rule, a subsidiary member of the group is jointly and severally liable for a liability of the head company: see section 721-10 of the Income Tax Assessment Act 1997.
(2) The purposes covered by this subsection are:
(a) working out the head company’s and subsidiary member’s interests in onshore petroleum projects for any year of tax in which any of the period occurs or any later year of tax; and
(b) working out any tax that is payable in relation to such an interest for any such year of tax; and
(c) working out assessable receipts and deductible expenditure arising in relation to such an interest for any such year of tax.
Examples: The following are some examples of consequences of the single entity rule:
(a) a subsidiary member’s interest in an onshore petroleum project becomes a part of the head company’s aggregated interest in the project;
(b) a subsidiary member’s assessable receipts and deductible expenditure relating to the interest are inherited by the head company along with the interest;
(c) liabilities that a subsidiary member has to pay tax before becoming a member of the group (and any interest charges associated with such a liability) remain liabilities of the subsidiary member and not the head company.
58Q Interests taken to be transferred to head company etc. on joining
If, because of the application of section 58P, a person is taken at a particular time to start being part of the head company or provisional head company, section 48 applies as if each of the person’s interests in onshore petroleum projects just before that time had been transferred to the head company or provisional head company.
58R Interests taken to be transferred to leaving entity on leaving
(1) If:
(a) at a particular time, a person stops being taken, because of section 58P, to be part of the head company or provisional head company; and
(b) the entitlement comprising the person’s interest in an onshore petroleum project just after that time is all of the entitlement comprising the company’s interest in the project just before that time;
section 48 applies as if the person’s interest in the project just after that time had been transferred from the company under a transaction of a kind referred to in subsection 48(1A).
(2) If:
(a) at a particular time, a person stops being taken, because of section 58P, to be part of the head company or provisional head company; and
(b) the entitlement comprising the person’s interest in an onshore petroleum project just after that time is part, but not all, of the entitlement comprising the company’s interest in the project just before that time;
section 48A applies as if the person’s interest in the project just after that time had been transferred from the company under a transaction of a kind referred to in subsection 48A(1).
58S Acquisition of consolidated group by another consolidated group etc.
If a member of a consolidated group or MEC group (the relinquishing group ) becomes a member of another consolidated group or MEC group (the acquiring group ) at a particular time (the acquisition time ):
(a) first apply subsection 58R(1) or (2) (as the case requires) in relation to the member ceasing to be a member of the relinquishing group as if section 58P did not apply in relation to the member just after the acquisition time; and
(b) then apply section 58Q in relation to the member becoming a member of the acquiring group as if section 58P did not apply in relation to the member just before the acquisition time.
58T Effect of choice to continue group after shelf company becomes new head company
(1) If a company (the interposed company ) chooses under subsection 124-380(5) of the Income Tax Assessment Act 1997 that a consolidated group is to continue in existence at and after the time referred to in that subsection as the completion time, for the purposes of this Act:
(a) the group is taken not to have ceased to exist under subsection 703-5(2) of that Act because the company referred to in subsection 124-380(5) of that Act as the original company ceases to be the head company of the group; and
(b) the interposed company is taken to have become the head company of the consolidated group at the completion time; and
(c) the original company is taken to have ceased to be the head company at that time.
Note: A further result is that the original company is taken to have become a subsidiary member of the group at that time.
(2) For the purposes referred to in subsection 58P(2) in relation to a year of tax ending after the completion time, everything that happened in relation to the original company 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 that time;
as if, at all times before the completion time, the interposed company had been the original company, and the original company had been the interposed company.
Note: This section treats the original company and the interposed company as having in effect exchanged identities throughout the period before the completion time, but without affecting any of the original company’s other attributes.
58U Effect of change of head company or provisional head company of a MEC group
(1) For the purposes referred to in subsection 58P(2) in relation to a year of tax:
(a) if:
(i) a company (the old head company ) is the head company of a *MEC group at the end of an income year (within the meaning of the Income Tax Assessment Act 1997); and
(ii) a different company (the new head company ) is the head company of the group at the start of the next income year (the transition time ); or
(b) if:
(i) a company (also the old head company ) is the *provisional head company of a *MEC group just before a cessation event (within the meaning of that Act) happens to the company; and
(ii) a different company (also the new head company ) is the provisional head company of the group just after that cessation event (also the transition time );
everything that happened in relation to the old head company before the transition time is taken to have happened in relation to the new head company instead, as if the new head company had been the old head company at all times before the transition time.
Note 1: This section treats the new head company as having in effect assumed the identity of the old head company throughout the period before the transition time, but without affecting any of the other attributes of the old head company.
Note 2: A further result is that the old head company is taken to have become a subsidiary member of the group at the transition time.
(2) However, this section does not apply in relation to a year of tax ending on or before the transition time.
58V Effect of group conversions involving MEC groups
(1) This section applies if, at a particular time (the conversion time ):
(a) a consolidated group (the new group ) is created from a *MEC group (the old group ); or
(b) a MEC group (the new group ) is created from a consolidated group (the old group ).
(2) For the purposes referred to in subsection 58P(2) in relation to a year of tax ending after the conversion time:
(a) the new group is taken to be a continuation of the old group; and
(b) the old group is taken not to have ceased to exist for the purposes of subsection 58N(4); and
(c) everything that happened in relation to the head company of the old group before the conversion time is taken instead to have happened in relation to:
(i) if the head company of the old group is the same entity as the head company of the new group - that entity in its role as head company of the new group; or
(ii) otherwise - the head company of the new group (as if the head company of the new group had been the head company of the old group at all times before the conversion time).