Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 716 - Miscellaneous special rules  

Subdivision 716-A - Assessable income and deductions spread over several membership or non-membership periods  

Operative provisions

SECTION 716-15   Assessable income spread over 2 or more income years  

716-15(1)    
This section applies if, apart from this Part, a provision of this Act would spread an amount (the original amount ) over 2 or more income years (whether or not because of a choice) by including part of the original amount in the same entity ' s assessable income for each of those income years.

Head company ' s assessable income

716-15(2)    
If:

(a) for some but not all of an income year, an entity is a ^* subsidiary member of a ^* consolidated group; and

(b) a part of the original amount:

(i) would have been included in the assessable income of the ^* head company of the group for that income year if the entity had been a subsidiary member of the group throughout that income year; but

(ii) would have been included in the entity ' s assessable income for that income year if throughout that income year the entity had not been a subsidiary member of any ^* consolidated group;

the head company ' s assessable income for that income year includes a proportion of that part.

Note 1:

Examples of when paragraph (2)(b) could be satisfied are:

• the head company is the entity referred to in subsection (1), but its connection with the original amount passes to the entity when the entity ceases to be a subsidiary member of the group (see section 701-40 (Exit history rule));

• the entity is the entity referred to in subsection (1) but joins a consolidated group part way through the income year, so that its connection with the original amount passes to the head company of the group (see section 701-5 (Entry history rule)).

Note 2:

If the entity is a subsidiary member of the group throughout the income year, the part of the original amount will be included in the head company ' s assessable income for the income year, either:

• because the head company is the entity referred to in subsection (1); or

• because of section 701-1 (Single entity rule); or

• because of section 701-5 (Entry history rule).

716-15(3)    
The proportion is worked out by multiplying that part of the original amount by:

• the number of days that are in both the income year and the ^* spreading period, and on which the entity was a ^* subsidiary member of the group;

divided by:

• the number of days that are in both the income year and the spreading period.

Entity ' s assessable income for a non-membership period

716-15(4)    
If:

(a) for some but not all of an income year, an entity is a ^* subsidiary member of a ^* consolidated group; and

(b) a part of the original amount would have been included in the entity ' s assessable income for that income year if throughout that income year the entity had not been a subsidiary member of any ^* consolidated group;

the assessable income of the entity for a part of the income year that is a non-membership period for the purposes of section 701-30 includes a proportion of that part.

Note 1:

Section 701-30 is about working out an entity ' s tax position for a period when it is not a subsidiary member of any consolidated group.

Note 2:

If throughout the income year the entity is not a subsidiary member of any consolidated group, this section does not affect the part of the original amount that is assessable income of the entity for the income year either:

• because the entity is the entity referred to in subsection (1); or

• because of section 701-40 (Exit history rule).

716-15(5)    
The proportion is worked out by multiplying that part of the original amount by:

• the number of days that are in both the non-membership period and the ^* spreading period;

divided by:

• the number of days that are in both the income year and the spreading period.

Spreading period

716-15(6)    
The spreading period for the original amount is the period by reference to which the respective parts of the original amount that, apart from this Part, would be included in an entity ' s assessable income for the 2 or more income years are worked out.