Taxation Laws Amendment Act (No. 1) 2004 (101 of 2004)

Schedule 6   Goods and services tax: interaction with consolidation regime

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

1   At the end of Division 110

Add:

110-15 Supplies under operation of consolidated group regime

(1) A supply is not a *taxable supply to the extent that it occurs because of the operation of these provisions:

(a) Part 3-90 of the *ITAA 1997;

(b) Part 3-90 of the Income Tax (Transitional Provisions) Act 1997.

(2) Without limiting the scope of subsection (1), for the purposes of that subsection, the operation mentioned in that subsection includes an operation that results from:

(a) a choice made under the provisions mentioned in that subsection; or

(b) any other voluntary action provided for by those provisions.

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

110-20 Tax sharing agreements - entering into agreement etc.

(1) This section applies if:

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

(b) the agreement satisfies the requirements of subsections 721-25(1) and (2) of the *ITAA 1997 in relation to an existing or future *group liability of the *head company of a *consolidated group or *MEC group.

(2) The supply is not a *taxable supply to the extent that it relates to the fact that the agreement satisfies those requirements.

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

110-25 Tax sharing agreements - leaving group clear of group liability

(1) A supply made to a *TSA contributing member of a *consolidated group or a *MEC group is not a *taxable supply if:

(a) the supply is a release from an obligation relating to a *contribution amount in relation to a *group liability of the *head company of the group; and

Example: The obligation could be a contractual obligation created by the agreement under which the contribution amount was determined.

(b) the TSA contributing member has, for the purposes of subsection 721-30(3) of the *ITAA 1997, left the group clear of the group liability.

Note: See section 721-35 of the ITAA 1997 for when a TSA contributing member has left a group clear of the group liability.

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

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).