A New Tax System (Goods and Services Tax) Act 1999

Chapter 4 - The special rules  

Part 4-2 - Special rules mainly about supplies and acquisitions  

Note:

The special rules in this Part mainly modify the operation of Part 2-2 , but they may affect other Parts of Chapter 2 in minor ways.

Division 110 - Tax-related transactions  

Subdivision 110-A - Income tax-related transactions  

110-30   Tax funding agreements  

(1)    
This section applies if:

(a) an entity makes a supply because it enters into or becomes a party to a written agreement; and

(b) the agreement deals with the distribution of economic burdens and benefits directly related to * tax-related liabilities mentioned in subsection 721-10(2) of the * ITAA 1997 of the * head company of a * consolidated group or * MEC group , among * members and former members of the group; and

(c) if the group is not in existence when the entity enters into or becomes a party to the agreement - the agreement contemplates that the parties to the agreement will become members of the group when it does come into existence; and

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

(2)    
The supply is not a * taxable supply to the extent that it relates to the fact that the agreement deals with the distribution mentioned in paragraph (1)(b).

(3)    
Without limiting paragraph (1)(b), the agreement deals with the distribution mentioned in that paragraph if it includes one or more of the following kinds of provisions:

(a) provisions for * members or former members of the group to contribute towards payment of * tax-related liabilities mentioned in subsection 721-10(2) of the * ITAA 1997 of the * head company of the group;

(b) provisions for payments to be made to a member or former member of the group in recognition of activities or attributes of that member that have the effect of reducing the amount of those liabilities.

(4)    
This section has effect despite section 9-5 (which is about what are taxable supplies).