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

7   Before section 45-755 in Schedule 1

Insert (after the group heading):

45-740 Change of head company

Object

(1) The object of this section (except subsection (8)) is to ensure that, for the purposes of this Part, when a company becomes the new *head company of a *consolidated group:

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

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

(2) This section applies to a *head company of a *consolidated group if:

(a) the company is an interposed company mentioned in subsection 45-705(4) (an interposed company that chooses under subsection 124-380(5) of the Income Tax Assessment Act 1997 that the consolidated group is to continue in existence at and after the completion time mentioned in that subsection); and

(b) the conditions in subsection 45-705(4) are satisfied in relation to the interposed company (whether or not this Subdivision applies to the company as the head company of the group for any period of time).

(3) Everything that happened before the completion time in relation to the company (the original company ) that was the *head company of the *consolidated group immediately before the completion time:

(a) is taken to have happened in relation to the interposed company instead of in relation to the original company; and

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

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

(c) the interposed company had been the original company; and

(d) the original company had been the interposed company.

(4) To avoid doubt, subsection (3) also covers everything that, immediately before the completion time, was taken to have happened in relation to the original 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 Subdivision 45-S in this Schedule; or

(f) this section; or

(g) section 45-920 in this Schedule (effects of a change of *provisional head company of a MEC group for the purposes of this Part); or

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

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

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

(b) an amendment of the assessment;

is taken to be something that had happened to the interposed company, whether or not the assessment or amendment is made before the completion time.

(6) This section has effect for the purposes of applying this Part to *members of the *consolidated group in relation to an *instalment quarter of the interposed company that ends after the completion time.

Note: An assessment mentioned in subsection (5) may therefore be taken to be the base assessment of the interposed company for the purposes of this Part.

(7) Subsections (1) to (6) are to be disregarded in applying section 45-705 (about the application of this Subdivision to a company as the *head company of a *consolidated group).

Note: For example, if the Commissioner has given an initial head company instalment rate to the original company during an earlier instalment quarter, the rate is not, despite this section, treated as if it had been given to the interposed company for the purposes of section 45-705. Subject to the other provisions in that section, this Subdivision therefore starts applying to the interposed company under subsection 45-705(4).

Special rule for the original company

(8) A provision of this Part that applies on an entity becoming a *subsidiary member of a *consolidated group does not apply to the original company when it is taken to have become such a member at the completion time as a result of section 703-70 of the Income Tax Assessment Act 1997.

Note: Section 45-755 (the entry rule) therefore does not apply to the original company on the company becoming a subsidiary member of the consolidated group.