Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 719 - MEC groups  

Subdivision 719-B - MEC groups and their members  

Basic concepts

SECTION 719-5   What is a MEC group ?  

When MEC group comes into existence

719-5(1)    
A MEC (multiple entry consolidated) group comes into existence when:

(a) a choice, by 2 or more ^* eligible tier-1 companies of a ^* top company, that the ^* potential MEC group derived from those companies be consolidated starts to have effect under section 719-55 ; or

(b) a ^* special conversion event happens to a potential MEC group derived from an eligible tier-1 company of a top company.

Original members of a MEC group that results from a choice

719-5(2)    
A MEC group that results from a choice by 2 or more companies under section 719-50 consists of the potential MEC group derived from time to time from whichever one or more of those companies continue to be eligible tier-1 companies of the top company. This subsection has effect subject to subsection (4) (which deals with new eligible tier-1 members).

Original members of a MEC group that results from a special conversion event

719-5(3)    
A MEC group that results from a special conversion event consists of the potential MEC group derived from time to time from whichever one or more of the following companies continue to be eligible tier-1 companies of the top company:

(a) the company mentioned in paragraph 719-40(1)(b) ;

(b) the companies specified in the notice under paragraph 719-40(1)(e) .

This subsection has effect subject to subsection (4) (which deals with new eligible tier-1 members).

New eligible tier-1 members of a MEC group

719-5(4)    
If:

(a) a MEC group consists of the members of a potential MEC group derived from one or more eligible tier-1 companies of a top company; and

(b) at a particular time after the MEC group came into existence, one or more other companies become eligible tier-1 companies of the top company; and

(c) the *provisional head company of the MEC group makes a choice in writing no later than the day mentioned in subsection (6):

(i) specifying one or more of the companies mentioned in paragraph (b); and

(ii) stating that the specified companies are to become members of the MEC group with effect from that time; and

(d) if:

(i) a company specified in the choice was a member of another MEC group immediately before that time; and

(ii) all of the eligible tier-1 companies in that other MEC group became eligible tier-1 companies of the top company at that time;

each eligible tier-1 company in that other MEC group is specified in the choice;

then, with effect from that time, the MEC group mentioned in paragraph (a) is taken to consist of the potential MEC group derived from time to time from whichever one or more of the following companies continue to be eligible tier-1 companies of the top company:

(e) the companies mentioned in paragraph (a);

(f) the companies specified in the choice.

Note:

The provisional head company of the group must give the Commissioner a notice in the approved form containing information about each entity that becomes a subsidiary member of the group on that day because of the choice (see sections 719-77 and 719-80 ).

719-5(5)    
To avoid doubt, paragraph (4)(a) applies to a MEC group even if the composition of the group has been worked out because of one or more previous applications of subsection (4).

719-5(6)    

The day mentioned in paragraph (4)(c) is:

(a) if the company mentioned in subsection (6A) is required to give the Commissioner its *income tax return for the income year during which the time mentioned in paragraph (4)(b) occurs - the day on which that company gives the Commissioner that income tax return; or

(b) otherwise - the last day in the period within which that company would be required to give the Commissioner such a return if it were required to give the Commissioner such a return.

719-5(6A)    

The company is:

(a) in a case where subsection 719-75(1) or (2) applies - the company that will be the *head company of the group as at the end of the income year; and

(b) in a case where subsection 719-75(3) applies - the company that will be the head company of the group immediately before the group ceased to exist.

Continued existence of MEC group

719-5(7)    
If a MEC group (the first MEC group ) consists of the members of a potential MEC group derived from one or more eligible tier-1 companies of a top company, the first MEC group continues to exist until:

(a) the potential MEC group ceases to exist; or

(b) there is a change in the identity of the top company, and the eligible tier-1 companies that were members of the first MEC group immediately before the change become members of another MEC group immediately after the change; or

(c) there ceases to be a provisional head company of the first MEC group.

The first MEC group ceases to exist when one of those events happens.

Note:

Subsection 719-10(7) sets out the circumstances in which the potential MEC group ceases to exist.