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  

Tax sharing agreements  

SECTION 721-25   When a group liability is covered by a tax sharing agreement  

721-25(1)    
For the purposes of this Division, a group liability is covered by a tax sharing agreement if, just before the head company ' s due time:

(a) an agreement existed between the ^* head company of the group and one or more of the contributing members (the TSA contributing members ); and

(b) a particular amount (the contribution amount ) could be determined under the agreement for each TSA contributing member in relation to the group liability; and

(c) the contribution amounts for each of the TSA contributing members in relation to the group liability, as determined under the agreement, represented a reasonable allocation of the total amount of the group liability among the head company and the TSA contributing members; and

(d) the agreement complied with the requirements (if any) set out in the regulations.

721-25(1A)    

The requirement in paragraph (1)(c) is taken to be satisfied if:

(a) the group liability is a ^* tax-related liability mentioned in item 3 of the table in subsection 721-10(2) in relation to an income year; and

(b) before, at or after the head company ' s due time, the ^* head company of the group became entitled to either or both of the following:

(i) a credit under section 45-30 in Schedule 1 to the Taxation Administration Act 1953 for that income year;

(ii) a credit under section 45-865 in Schedule 1 to that Act for that income year; and

(c) just before the head company ' s due time, the contribution amounts for each of the TSA contributing members in relation to the group liability, as determined under the agreement, represented a reasonable allocation among the head company and the TSA contributing members of the difference between:

(i) the total amount of the group liability; and

(ii) the amount of the credit, or the sum of the credits, mentioned in paragraph (b).

721-25(1AA)    
(Repealed by No 96 of 2014)

721-25(1B)    

Despite subsections (1) and (1A), the group liability is not covered by a tax sharing agreement for the purposes of this Division if, apart from this subsection, the requirements in those subsections in relation to the group liability would be satisfied in relation to 2 or more agreements.

721-25(2)    

Despite subsections (1) and (1A), the group liability is not covered by a tax sharing agreement for the purposes of this Division if:

(a) the agreement mentioned in paragraph (1)(a) was entered into as part of an arrangement; and

(b) a purpose of the arrangement was to prejudice the recovery by the Commissioner of some or all of the amount of the group liability or liabilities of that kind.

721-25(3)    

Despite subsections (1) and (1A), the group liability is taken never to have been covered by a tax sharing agreement for the purposes of this Division if:

(a) the Commissioner gives the ^* head company of the group written notice under this subsection (whether before, at or after the head company ' s due time) in relation to the group liability; and

(b) the notice requires the head company to give the Commissioner a copy of the agreement mentioned in paragraph (1)(a) in the ^* approved form within 14 days after the notice is given; and

(c) the Commissioner does not receive a copy of the agreement by the time required.

Note:

If this subsection operates, joint and several liability can arise under section 721-15 in relation to the group liability.