Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 709 - Other rules applying when entities become subsidiary members etc.  

Subdivision 709-C - Treatment of excess franking deficit tax offsets when entity becomes a subsidiary member of a consolidated group  

SECTION 709-185   Joining entity ' s excess franking deficit tax offsets transferred to head company  

709-185(1)    
This section operates if:

(a) an entity (the joining entity ) becomes a ^* subsidiary member of a ^* consolidated group at a time (the joining time ); and

(b) the joining entity is entitled to a ^* tax offset under section 205-70 for the income year that ends or, if subsection 701-30(3) applies, that is taken by subsection (3) of that section to end, at the joining time; and

(c) an amount (the joining entity ' s excess ) of the offset remains after applying section 63-10 (about the tax offset priority rules) to the joining entity ' s basic income tax liability for that income year.

Transfer of excess to head company

709-185(2)    

For the purpose of applying subsection 205-70(1) to the * head company of the * consolidated group for the income year in which the joining time occurs:

(a) if, as described in paragraph 205-70(1)(c) , an amount of a * tax offset remains after applying section 63-10 - that amount is taken to be increased by the amount of the joining entity ' s excess; or

(b) otherwise:

(i) paragraph 205-70(1)(c) is taken to apply to the head company; and

(ii) the remaining amount of a tax offset covered by that paragraph is taken to be the amount of the joining entity ' s excess.

Note:

Paragraph 205-70(1)(c) refers to tax offsets under section 205-70 .

709-185(2A)    

In working out whether paragraph (2)(a) applies, take into account any application of this section to any other entity that became a * subsidiary member of the group before the joining time.

Joining entity prevented from utilising excess in later income years

709-185(3)    
For the purpose of applying subsection 205-70(1) to the joining entity for any income year after that in which the joining time occurs, the joining entity ' s excess is disregarded.