New Business Tax System (Consolidation and Other Measures) Act 2003 (16 of 2003)

Schedule 24   Consolidation: pay as you go (PAYG) instalments

Part 1   Amendment of the Taxation Administration Act 1953

18   At the end of Subdivision 45-R in Schedule 1

Add:

45-880 Continued application of Subdivision 45-Q to the head company of an acquired group

(1) This section applies to a company for which all of the following conditions are satisfied in relation to a particular time (the takeover time ):

(a) just before the takeover time, Subdivision 45-Q applied to the company as the *head company of a *consolidated group;

(b) at the takeover time, the company becomes a *wholly-owned subsidiary of a *member of another consolidated group or *MEC group;

(c) that other group is consolidated at or before the takeover time under section 703-50 or 719-50 of the Income Tax Assessment Act 1997;

(d) the Commissioner receives the choice (or notice) under that section for the consolidation of that other group not later than 28 days after the takeover time, or within such further period (if any) as the Commissioner allows;

(e) at the takeover time, Subdivision 45-Q (including that Subdivision as applied under Subdivision 45-S) does not apply to the head company or the *provisional head company of that other group.

(2) For the purposes of this Part only, this Act has effect in relation to the company and the other *members of the *consolidated group mentioned in paragraph (1)(a) (the preserved group ) as if, during the period covered by subsection (5):

(a) the preserved group had continued to exist as a consolidated group; and

(b) the company were still the *head company of the preserved group; and

(c) Subdivision 45-Q had continued to apply to the company as the head company of the preserved group; and

(d) an entity, while being a *subsidiary member of the preserved group, were not treated as a member of the group mentioned in paragraph (1)(b) (the new group ).

(3) Subsection (2) does not stop the company from being a member of the new group for the purposes of this Part during the period covered by subsection (5).

Note: This means, for example, sections 45-855 and 45-860 apply to the head company as a member of the new group.

(4) However, for the purposes of applying section 45-855 to the company, a reference in that section to an application of section 701-1 of the Income Tax Assessment Act 1997 to the company in relation to the period mentioned in section 45-855 is taken to be:

(a) a reference only to an application of section 701-1 of that Act to the company as a member of the new group during that period; and

(b) not a reference to an application (because of subsection (2) of this section) of section 701-1 of that Act to the company as the *head company of the preserved group during that period.

(5) This subsection covers the period that starts from the start of the *instalment quarter of the company that includes the takeover time and ends at the earlier of the following times:

(a) the end of the instalment quarter of the company during which the company ceases to be a member of the new group;

(b) just before the instalment quarter of the company during which the Commissioner gives the *initial head company instalment rate to the *head company, or the *provisional head company, of the new group.

(6) The Commissioner may, on the application of the company made not later than 28 days after the takeover time, allow such extension of time for the purposes of paragraph (1)(d) as he or she considers appropriate.

(7) To avoid doubt, nothing in this section prevents the operation of section 45-755 or 45-760 to *members of the preserved group while it continues to exist under subsection (2).

45-885 Early application of Subdivision 45-Q to the head company of a new group

(1) This section applies to a company for which all of the following conditions are satisfied in relation to a particular time (the starting time ):

(a) just before the starting time, the company was a *subsidiary member of a *consolidated group, or a member of a *MEC group;

(b) just before the starting time, the consolidated group or MEC group was a mature group (see subsection (4));

(c) at the starting time, either of the following applies:

(i) the company ceases to be a subsidiary member of the consolidated group, or a member of the MEC group;

(ii) the group ceases to exist (otherwise than because a MEC group or consolidated group is *created from the group, or because its *head company or *provisional head company becomes a *wholly-owned subsidiary of a member of another mature group);

(d) at the starting time, the company is the head company of another consolidated group;

(e) within 28 days after the starting time, or within such further period (if any) as the Commissioner allows, the Commissioner receives the choice to consolidate, at and after the starting time, that other consolidated group under section 703-50 of the Income Tax Assessment Act 1997.

(2) For the purposes of this Part:

(a) the instalment rate that the Commissioner is taken to have given to the company under paragraph 45-760(2)(a) has effect as if it were the *initial head company instalment rate for the company as the *head company of the *consolidated group mentioned in paragraph (1)(d); and

(b) an instalment rate that would otherwise be the initial head company instalment rate for the company as the head company of that consolidated group is not to be treated as that initial head company instalment rate.

Note: This means, subject to the provisions in section 45-705, Subdivision 45-Q starts applying to the company as the head company of the consolidated group at the start of the instalment quarter that includes the starting time: see subsection (2) of that section and paragraph 45-760(2)(a).

(3) The Commissioner may, on the application of the company made within 28 days after the starting time, allow such extension of time for the purposes of paragraph (1)(e) as he or she considers appropriate.

Mature group

(4) For the purposes of this section, a *consolidated group or a *MEC group is a mature group at a particular time if:

(a) for a consolidated group - Subdivision 45-Q applies to its *head company at that time; or

(b) for a MEC group - Subdivision 45-Q, as applied under Subdivision 45-S, applies to its *provisional head company at that time.

Subdivision 45-S - MEC groups

Guide to Subdivision 45-S

45-900 What this Subdivision is about

This Subdivision sets out how this Part applies in relation to MEC groups and their members.

Table of sections

Preliminary

45-905 Objects of Subdivision

General modification rules

45-910 Extended operation of Part to cover MEC groups

Extended operation of Subdivision 45-Q

45-913 Sections 45-705 and 45-740 do not apply to members of MEC groups

45-915 Application of Subdivision 45-Q to provisional head company

45-917 Assumption for applying section 45-710 (single entity rule)

45-920 Change of provisional head company

45-922 Life insurance company

Extended operation of Subdivision 45-R

45-925 Additional modifications of sections 45-855 and 45-860

45-930 Modifications of sections 45-865 and 45-870 and a related provision

45-935 Additional modifications of section 45-885

[This is the end of the Guide.]

Preliminary

45-905 Objects of Subdivision

The objects of this Subdivision are to:

(a) extend the operation of this Part (except sections 45-705 and 45-740 and this Subdivision) so that it can apply in relation to *MEC groups and their members; and

(b) modify the rules in this Part for that extended operation so that they take account of the special characteristics of MEC groups.

General modification rules

45-910 Extended operation of Part to cover MEC groups

(1) This Part (except sections 45-705 and 45-740 and this Subdivision) has effect in relation to members of a *MEC group in the same way in which it has effect in relation to *members of a *consolidated group.

(2) However, that effect is subject to the modifications set out in the following table and elsewhere in this Subdivision.

Exceptions

(3) The modifications set out in the table do not apply to the following provisions:

(a) this Subdivision;

(b) subsection 45-30(4) (see section 45-930);

(c) the note at the end of subsection 45-330(5);

(d) note 2 at the end of section 45-700;

(e) sections 45-705 and 45-740 (see sections 45-913, 45-915 and 45-920);

(f) subparagraphs 45-760(1)(c)(i) and (ii);

(g) the note at the end of section 45-850;

(h) sections 45-865 and 45-870 (see section 45-930);

(i) paragraphs (1)(b), (c), (d) and (e), and subsection (5), of section 45-880;

(j) paragraphs (1)(a), (b) and (c), and subsection (4), of section 45-885.

Note: The provisions covered by paragraphs (c), (d), (f), (g), (i) and (j) apply to members of a MEC group without any modifications.

Extended operation of Subdivision 45-Q

45-913 Sections 45-705 and 45-740 do not apply to members of MEC groups

In applying Subdivision 45-Q to members of a *MEC group, the Subdivision has effect as if:

(a) section 45-705 had no effect and section 45-915 had effect instead; and

(b) section 45-740 had no effect and section 45-920 had effect instead.

45-915 Application of Subdivision 45-Q to provisional head company

Period during which Subdivision applies to provisional head company

(1) Subject to sections 45-880 and 45-885 (as applied under this Subdivision), Subdivision 45-Q applies to a company as the *provisional head company of a *MEC group during the period:

(a) starting at the start of the *instalment quarter of the company determined under subsection (2), (3) or (4); and

(b) ending:

(i) at the end of the instalment quarter of the company determined under paragraph (6)(a) or (b); or

(ii) just before the instalment quarter of the company determined under paragraph (6)(c).

Note: The application of Subdivision 45-Q to the provisional head company is subject to the modifications set out in this section and elsewhere in this Subdivision.

When the period begins - initial head company instalment rate

(2) Subdivision 45-Q starts to apply to a company as the *provisional head company of a *MEC group at the start of an *instalment quarter under this subsection if, during that quarter, the Commissioner gives the company (as that provisional head company) the *initial head company instalment rate.

Note: The operation of this subsection may be affected by section 45-885 (as applied under this Subdivision).

When the period begins - group created from consolidated group

(3) Subdivision 45-Q starts to apply to a company as the *provisional head company of a *MEC group at the start of an *instalment quarter (the starting quarter ) under this subsection if all of the following conditions are satisfied:

(a) during the starting quarter, the Commissioner is notified of the creation of the MEC group from a *consolidated group (see subsection (5));

(b) the company is the provisional head company of the MEC group when the Commissioner is so notified;

(c) either of the following applies:

(i) Subdivision 45-Q applied to the *head company of the consolidated group at the end of the previous instalment quarter;

(ii) the Commissioner gives the *initial head company instalment rate to the head company of the consolidated group during the starting quarter.

Note: For the application of Subdivision 45-Q to a head company of a consolidated group: see section 45-705.

When the period begins - new provisional head company

(4) Subdivision 45-Q starts to apply to a company as the *provisional head company of a *MEC group at the start of an *instalment quarter (the starting quarter ) under this subsection if both of the following conditions are satisfied:

(a) the company is appointed as the provisional head company of the MEC group under subsection 719-60(3) of the Income Tax Assessment Act 1997 during the starting quarter;

(b) one of the following applies:

(i) Subdivision 45-Q applied to the former provisional head company of the MEC group at the end of the previous instalment quarter;

(ii) the Commissioner gives the *initial head company instalment rate to the former provisional head company of the MEC group during the starting quarter;

(iii) the Commissioner is notified during the starting quarter of the creation of the MEC group from a *consolidated group and Subdivision 45-Q applied to the *head company of the consolidated group at the end of the previous instalment quarter;

(iv) the Commissioner is notified during the starting quarter of the creation of the MEC group from a consolidated group and the Commissioner gives the initial head company instalment rate to the head company of the consolidated group during the starting quarter.

Notification of creation of MEC group from consolidated group

(5) For the purposes of subsections (3) and (4), the Commissioner is notified of the creation of a *MEC group from a *consolidated group when the Commissioner receives a notice of the consolidation of the MEC group under subsection 719-40(1) of the Income Tax Assessment Act 1997.

When the period ends

(6) Subdivision 45-Q stops applying to a company as the *provisional head company of a *MEC group at the earliest of the following times after the company becomes the provisional head company:

(a) the end of the *instalment quarter during which the MEC group ceases to exist (other than because a *consolidated group is *created from the MEC group);

(b) the end of the instalment quarter during which a consolidated group is created from the MEC group;

(c) just before the instalment quarter during which another company is appointed as the provisional head company of the MEC group under subsection 719-60(3) of the Income Tax Assessment Act 1997.

Note: The operation of this subsection because of paragraph (a) may be affected by section 45-880 (as applied under this Subdivision).

(7) To avoid doubt, Subdivision 45-Q does not apply to a company as the *provisional head company of a *MEC group for any time at all if:

(a) subsection (2), (3) or (4), and subsection (6), would, apart from this subsection, apply to the company; but

(b) the time at which Subdivision 45-Q would stop applying to the company under subsection (6) is before the time at which that Subdivision would start to apply to the company under subsection (2), (3) or (4).

(8) To avoid doubt, Subdivision 45-Q may apply to a company as the *provisional head company of a *MEC group at a time when the company is not in fact the provisional head company of the group.

Note: An example of this is when a company replaces another company as the provisional head company of a MEC group. Under this section and section 45-920, Subdivision 45-Q may start applying to the company as if it had already become the provisional head company when it is not yet such a company.

45-917 Assumption for applying section 45-710 (single entity rule)

In applying section 45-710 to members of a *MEC group at a particular time, the company that is the *provisional head company of the group at that time must be assumed to be the *head company of the group at all times during the period:

(a) throughout which the group is in existence; and

(b) that is all or a part of the income year of the company that includes that particular time.

45-920 Change of provisional head company

Object

(1) The object of this section (except subsection (9)) is to ensure that, for the purposes of this Part, when a company becomes the new *provisional head company of a *MEC group:

(a) the company inherits the history of the former provisional head company; and

(b) the history of the new provisional head company is effectively ignored.

(2) This section applies to a *provisional head company of a *MEC group (the new provisional head company ) that is appointed under subsection 719-60(3) of the Income Tax Assessment Act 1997 if one of the following conditions is satisfied:

(a) the conditions in subsection 45-915(4) are satisfied in relation to the new provisional head company (whether or not Subdivision 45-Q applies to the company as the provisional head company of the group for any period of time);

(b) the new provisional head company is so appointed during the *instalment quarter of the company in which the MEC group is *created from a *consolidated group and either:

(i) the Commissioner gives the *initial head company instalment rate to the *head company of the consolidated group during that instalment quarter; or

(ii) Subdivision 45-Q applied to the head company of the consolidated group at the end of the previous instalment quarter.

(3) Everything that happened before the starting time in relation to the company (the former company ) that was the *provisional head company of the *MEC group immediately before the starting time:

(a) is taken to have happened in relation to the new provisional head company instead of in relation to the former company; and

(b) is taken to have happened in relation to the new provisional head company instead of what would (apart from this section) be taken to have happened in relation to the new provisional head company before the starting time;

just as if, at all times before the starting time:

(c) the new provisional head company had been the former company; and

(d) the former company had been the new provisional head company.

(4) For the purposes of this section, the starting time is the time at which the *cessation event happened to the former company (the event that results in the appointment of the new provisional head company).

(5) To avoid doubt, subsection (3) also covers everything that, immediately before the starting time, was taken to have happened in relation to the former company because of:

(a) section 701-1 of the Income Tax Assessment Act 1997 (single entity rule); or

(b) section 701-5 of that Act (entry history rule); or

(c) section 703-75 of that Act (effects of an interposed company becoming the *head company of a *consolidated group); or

(d) section 719-90 of that Act (effects of a change of head company of a *MEC group); or

(e) section 45-710 in this Schedule (single entity rule for the purposes of this Part), including an application of that section under this Subdivision; or

(f) section 45-740 in this Schedule (effects of an interposed company becoming the head company of a consolidated group for the purposes of this Part); or

(g) this section; or

(h) one or more previous applications of any of the provisions covered by paragraphs (a) to (g).

(6) In addition, and without affecting subsection (3):

(a) an assessment of the former company for an income year that ends before the income year that includes the starting time; or

(b) an amendment of the assessment;

is taken to be something that had happened to the new provisional head company, whether or not the assessment or amendment is made before the starting time.

(7) This section has effect for the purposes of applying this Part to members of the *MEC group in relation to an *instalment quarter of the new provisional head company that ends after the starting time.

Note: An assessment mentioned in subsection (6) may therefore be taken to be the base assessment of the new provisional head company for the purposes of this Part.

(8) Subsections (1) to (7) are to be disregarded in applying section 45-915 (about the application of Subdivision 45-Q to a company as the *provisional head company of a *MEC group).

Note: For example, if the Commissioner has given an initial head company instalment rate to the former company during an earlier instalment quarter, the rate is not, despite this section, treated as if it had been given to the new provisional head company for the purposes of section 45-915. Subject to the other provisions in that section, Subdivision 45-Q therefore starts applying to the new provisional head company under subsection 45-915(4).

Special rule for the former company

(9) A provision of this Part that applies on an entity becoming a member (other than the *provisional head company) of a *MEC group does not apply to the former company when it becomes such a member at the starting time.

Note: Section 45-755 (the entry rule, as applied under this Subdivision) therefore does not apply to the former company on the company becoming such a member of the MEC group.

45-922 Life insurance company

In applying Subdivision 45-Q to members of a *MEC group for an *instalment quarter of the *provisional head company of the group in an income year of the provisional head company, the company is taken to be a *life insurance company for that quarter if:

(a) one or more life insurance companies are members of the group at any time during that quarter; or

(b) one or more life insurance companies were members of the group at any time during a previous instalment quarter of the company in that year.

Extended operation of Subdivision 45-R

45-925 Additional modifications of sections 45-855 and 45-860

In applying sections 45-855 and 45-860 to members of a *MEC group, those sections have effect as if, in addition to the modifications set out in the table in section 45-910:

(a) a reference in those sections to subsection 45-705(2) were a reference to subsection 45-915(2); and

(b) a reference in those sections to subparagraph 45-705(3)(c)(ii), (4)(d)(ii) or (iv) were a reference to subparagraph 45-915(3)(c)(ii), (4)(b)(ii) or (iv).

45-930 Modifications of sections 45-865 and 45-870 and a related provision

(1) In applying sections 45-865 and 45-870, and subsection 45-30(4) (which is related to section 45-865), to members of a *MEC group, those provisions have effect as if:

(a) a reference in those provisions to a *consolidated group were a reference to a *MEC group; and

(b) a reference in those provisions to a MEC group were a reference to a consolidated group.

Note: This means a reference in those provisions to the head company of a consolidated group has effect as if it were a reference to the head company of a MEC group. Similarly, a reference in those provisions to a subsidiary member of a consolidated group has effect as if it were a reference to a subsidiary member of a MEC group.

(2) However, the modifications in subsection (1) do not apply to subsection 45-865(4) and the note at the end of section 45-865.

Note: This means subsection 45-865(4) and the note apply to members of a MEC group without any modifications.

45-935 Additional modifications of section 45-885

In applying section 45-885 to members of a *MEC group, that section has effect as if, in addition to the modifications set out in the table in section 45-910, it had been modified as set out in the following table: