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 721-40   TSA liability and group liability are linked  

721-40(1)    
The liability of a TSA contributing member under subsection 721-30(2) (the TSA liability ) is separate and distinct for all purposes from the group liability to which it relates (the linked group liability ). For example, the Commissioner may take proceedings to recover the unpaid amount of the TSA liability, proceedings to recover the unpaid amount of the linked group liability, or both.

Note:

The TSA contributing member will not be jointly and severally liable for the linked group liability under section 721-15 (see subsection 721-15(3) ). However, the head company of the group remains liable for the linked group liability.

Payment or discharge of TSA liability

721-40(2)    
If an amount is paid or applied at a particular time towards discharging the TSA liability, the linked group liability is discharged at that time to the extent of the same amount.

Payment or discharge of linked group liability

721-40(3)    
If:

(a) an amount is paid or applied at a particular time towards discharging the linked group liability; and

(b) as a result, the amount unpaid on the TSA liability at that time (apart from this section) exceeds the amount unpaid on the linked group liability at that time;

the TSA liability is discharged at that time to the extent of the excess.

721-40(4)    
Subsections (2) and (3) operate in relation to a liability under a judgment (the judgment liability ):

(a) if the judgment liability is for the entire amount unpaid on the TSA liability - as if the judgment liability were the TSA liability; and

(b) if the judgment liability is for the entire amount unpaid on the linked group liability - as if the judgment liability were the linked group liability.

721-40(5)    
This section does not discharge a liability to a greater extent than the amount of the liability.