Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 721 - Liability for payment of tax where head company fails to pay on time  

Joint and several liability of contributing member  

SECTION 721-15   Head company and contributing members jointly and severally liable to pay group liability  

721-15(1)    
The following are jointly and severally liable to pay the group liability:

(a) the ^* head company; and

(b) each contributing member (other than a contributing member excluded by subsection (2)).

Note:

A group liability is a tax-related liability in relation to the head company and each contributing member. For rights of contribution in respect of such a liability, see subsection 265-45(2) in Schedule 1 to the Taxation Administration Act 1953 .

721-15(2)    

For the purposes of paragraph (1)(b), a contributing member is excluded by this subsection if it is, at the head company ' s due time, prohibited according to the effect of an ^* Australian law from entering into any arrangement under which the entity becomes subject to a liability referred to in subsection (1).

721-15(3)    
Subsection (1) does not operate if the group liability is covered by a tax sharing agreement (see section 721-25 ).

721-15(3A)    

Subsection (1) is taken never to have made a particular contributing member jointly and severally liable to pay the group liability if:

(a) the group liability was taken never to have been covered by the tax sharing agreement because of subsection 721-25(3) ; and

Note:

Subsection 721-25(3) provides for this to happen if the Commissioner did not receive a copy of the tax sharing agreement within 14 days after the Commissioner gave the head company the notice under that subsection.

(b) the Commissioner gave the contributing member written notice of the group liability under subsection (5); and

(c) apart from the operation of subsection 721-25(3) , the contributing member left the group clear of the group liability in accordance with section 721-35 ; and

(d) the contributing member gave the Commissioner a copy of the tax sharing agreement (that is, the relevant agreement mentioned in paragraph 721-25(1)(a) ) in the ^* approved form; and

(e) if the Commissioner gave the contributing member written notice of the group liability under subsection (5) (ignoring subsection 721-17(2) ) - the contributing member gave that copy of the agreement to the Commissioner within 14 days after that notice was given.

721-15(4)    
The joint and several liability of the contributing members under subsection (1) arises just after the ^* head company ' s due time.

721-15(5)    
The joint and several liability of a particular contributing member under subsection (1) becomes due and payable by the member 14 days after the Commissioner gives the member written notice under this subsection of the liability.

Note 1:

If the Commissioner gives this notice to one contributing member, and gives this notice to another contributing member on another day, the 2 contributing members will have different due and payable dates for the same liability.

Note 2:

This section does not affect the time at which the group liability arose for, or became due and payable by, the head company.

721-15(5A)    

Despite subsection (5), if the group liability is ^* general interest charge for a day, the joint and several liability of a particular contributing member under subsection (1) becomes due and payable by the member at the end of the day on which the Commissioner gives the member written notice of the liability under subsection (5).

721-15(6)    
To the extent that the contributing members ' liability under subsection (1) is not a liability for income tax, that liability is to be treated as a liability for income tax for the purposes of section 254 of the Income Tax Assessment Act 1936 .