New Business Tax System (Consolidation) Act (No. 1) 2002 (68 of 2002)
Schedule 4 Amendments about Pay as you go (PAYG) instalments
Part 1 The amendments
Taxation Administration Act 1953
1 At the end of Division 45 in Schedule 1
Add:
Subdivision 45-Q - General rules for consolidated groups
Guide to Subdivision 45-Q
45-700 What this Subdivision is about
This Subdivision allows the members of a consolidated group to be treated as a single entity for the purposes of Pay as you go (PAYG) instalments. Generally, the head company of the group is the entity liable to pay PAYG instalments.
The PAYG instalments provisions in this Part apply to the head company in much the same way as they apply to any other company. However, the operation of some of these provisions is modified by this Subdivision.
This Subdivision also contains special rules to deal with changes in the membership of the group.
Note 1: This Subdivision starts to apply to the head company of the group at a time that is later than the time when the group first comes into existence: see section 45-705.
Note 2: Subdivision 45-R sets out special rules for the period after the group comes into existence but before this Subdivision begins to apply to the head company of the group.
Table of sections
Application of Subdivision
45-705 Application
Usual operation of this Part for consolidated group members
45-710 Single entity rule
45-715 When instalments are due - modification of section 45-61
45-720 Head company cannot be an annual payer - modification of section 45-140
Membership changes
45-755 Entry rule (for an entity that becomes a subsidiary member of a consolidated group)
45-760 Exit rule (for an entity that ceases to be a subsidiary member of a consolidated group)
45-775 Commissioner's power to work out different instalment rate or GDP-adjusted notional tax
[This is the end of the Guide.]
Application of Subdivision
45-705 Application
This Subdivision applies to the *head company of a *consolidated group during the period:
(a) beginning at the start of the *instalment quarter during which the Commissioner gives the company its *initial head company instalment rate; and
(b) ending at the end of the instalment quarter during which the company ceases to be the head company of the group.
Usual operation of this Part for consolidated group members
45-710 Single entity rule
If an entity is a *subsidiary member of a *consolidated group for any period during which this Subdivision applies to the *head company of the group:
(a) that entity; and
(b) any other subsidiary member of the group;
are taken for the purposes of this Part to be parts of that head company (rather than separate entities) during that period.
Note: That means, amongst other things, the head company would be liable to pay instalments for that period as if the subsidiary members were parts of the head company.
45-715 When instalments are due - modification of section 45-61
If:
(a) the *head company of a *consolidated group is liable to pay an instalment for an *instalment quarter; and
(b) this Subdivision applies to the head company during that quarter;
then, despite subsection 45-61(2), the instalment is due on or before the 21st day of the month after the end of that quarter whether or not the head company is a *deferred BAS payer on that day.
45-720 Head company cannot be an annual payer - modification of section 45-140
Despite any other provisions in this Part, the *head company of a *consolidated group cannot choose to be an *annual payer under section 45-140 while this Subdivision applies to the head company.
[The next section is section 45-755.]
Membership changes
45-755 Entry rule (for a n entity that becomes a subsidiary member of a consolidated group)
(1) Despite any other provisions in this Part, an entity is liable to pay an instalment for an *instalment quarter or income year (as appropriate) during which the entity becomes a *subsidiary member of a *consolidated group if:
(a) this Subdivision applies to the *head company of the group at any time during that quarter or year (as appropriate); and
(b) the entity would otherwise be liable to pay an instalment for that quarter or year (as appropriate) if it had not become a subsidiary member of the group; and
(c) the entity becomes a subsidiary member of the group on a day other than the first day of that quarter or the first day of that year (as appropriate).
Note: Under paragraph (b), this section could apply to an entity that, at the time of becoming a subsidiary member of the group, was not a subsidiary member of another consolidated group, or was a member of another consolidated group but this Subdivision did not apply to the head company of that other group at that time.
Modifications for a quarterly payer who pays 4 instalments annually on the basis of GDP-adjusted notional tax
(2) Subsections (3) and (4) apply to the entity if:
(a) the entity would have been a *quarterly payer who pays 4 instalments annually on the basis of GDP-adjusted notional tax at the end of the *instalment quarter mentioned in subsection (1) if it had not become a *subsidiary member of the group; and
(b) the amount of the instalment payable by the entity for that quarter would have been worked out under paragraph 45-112(1)(b); and
(c) that quarter is not the fourth instalment quarter in an income year.
(3) For the purposes of working out the amount of the instalment payable by the entity for that *instalment quarter, subsection 45-410(5) applies to the entity as if that quarter were the fourth instalment quarter in the income year for which the entity is liable to pay an instalment.
(4) For the purposes of working out the *acceptable amount of the entity's instalment for that instalment quarter, subsection 45-232(3) applies to the entity as if that quarter were the fourth instalment quarter in the income year for which the entity is liable to pay an instalment.
45-760 Exit rule (for an entity that ceases to be a subsidiary member of a consolidated group)
(1) This section applies to an entity that satisfies both of the following conditions:
(a) the entity ceases to be a *subsidiary member of a *consolidated group during an *instalment quarter and this Subdivision applies to the *head company of the group at any time during that quarter;
(b) the entity does not, at the time it ceases to be a subsidiary member of the group, become a subsidiary member of another consolidated group the head company of which is one to which this Subdivision applies at that time.
(2) This Part applies to the entity as if:
(a) the Commissioner had given the entity an instalment rate equal to the most recent instalment rate given to the *head company mentioned in paragraph (1)(a) before the end of the *instalment quarter mentioned in that paragraph; and
(b) the entity were a *quarterly payer who pays on the basis of instalment income at the end of that instalment quarter, and of each subsequent instalment quarter, until:
(i) if the Commissioner first gives the entity an instalment rate worked out on the basis of the *base assessment covered by subsection (3) during the first instalment quarter of an income year - immediately before the end of that first instalment quarter; or
(ii) if that rate is given to the entity during any other instalment quarter of an income year - immediately after the end of the last instalment quarter of that year.
(3) This section only covers the first *base assessment of the entity for an income year that is, or includes, a period after the entity ceases to be a *subsidiary member of the group.
[The next section is section 45-775.]
45-775 Commissioner's power to work out different instalment rate or GDP-adjusted notional tax
(1) This section applies if any of the following changes (the membership change ) occurs in relation to a *consolidated group while this Subdivision applies to the *head company of the group:
(a) an entity becomes a *subsidiary member of the group or a number of entities become subsidiary members of the group;
(b) an entity ceases to be a subsidiary member of the group or a number of entities cease to be subsidiary members of the group.
(2) If the Commissioner, having regard to the object of this Part and the membership change, is of the opinion that it would be reasonable to do so, the Commissioner may work out:
(a) an instalment rate that is higher, or lower, than the most recent instalment rate given by the Commissioner to the *head company under section 45-15; or
(b) an amount of *GDP-adjusted notional tax that is higher, or lower, than the amount of GDP-adjusted notional tax worked out for the purposes of the most recent amount of instalment notified by the Commissioner to the head company under paragraph 45-112(1)(a).
(3) The new instalment rate or amount of *GDP-adjusted notional tax must be a rate or amount that, in the opinion of the Commissioner, is reasonable having regard to the object of this Part and the membership change.
Note 1: Subdivision 45-J does not apply for the purpose of working out an instalment rate under this section.
Note 2: Section 45-405 does not apply for the purpose of working out an amount of GDP-adjusted notional tax under this section.
Subdivision 45-R - Special rules for consolidated groups in relation to transitional income years
Guide to Subdivision 45-R
45-850 What this Subdivision is about
This Subdivision deals with the application of this Part to members of a consolidated group after the group has come into existence but before the members of the group are treated under Subdivision 45-Q as a single entity for the purposes of this Part.
Table of sections
Operative provisions
45-855 Section 701-1 disregarded for certain purposes
45-860 Member having a different instalment period
45-865 Credit rule
45-870 Head company's liability to GIC on shortfall in quarterly instalment
45-875 Other rules about the general interest charge
[This is the end of the Guide.]
Operative provisions
45-855 Section 701-1 disregarded for certain purposes
If:
(a) an amount is required to be worked out for the purpose of determining the *instalment income of an entity that is a *member of a *consolidated group for a period that is all or a part of a *consolidation transitional year for the entity; and
(b) the period ends before Subdivision 45-Q starts to apply to the *head company of the group;
that amount must be worked out without regard to any application of section 701-1 of the Income Tax Assessment Act 1997 to the entity in relation to the period.
45-860 Member having a different instalment period
Different instalment period - instalment quarter
(1) If:
(a) but for Subdivision 45-Q, a *subsidiary member of a *consolidated group would be liable to pay an instalment for an *instalment quarter of the subsidiary member during which Subdivision 45-Q starts to apply to the *head company of the group; and
(b) that quarter ends before the end of the instalment quarter of the head company during which that Subdivision starts to apply to the head company;
then, despite section 45-710, the subsidiary member is liable to pay an instalment for that quarter.
Different instalment period - income year
(2) If:
(a) but for Subdivision 45-Q, a *subsidiary member of a *consolidated group would be liable to pay an annual instalment for an income year of the subsidiary member during which Subdivision 45-Q starts to apply to the *head company of the group; and
(b) that year ends before the end of the income year of the head company during which that Subdivision starts to apply to the head company;
then, despite section 45-710, the subsidiary member is liable to pay an instalment for that year.
Assumptions for working out amount of instalment
(3) The amount of the instalment must be worked out on the following assumptions:
(a) that the *instalment quarter or income year of the *subsidiary member (as appropriate) consists only of the period that is the part of the quarter or year occurring before Subdivision 45-Q starts to apply to the *head company of the group;
(b) that an amount required to be worked out for the purpose of determining the *instalment income of the subsidiary member for that period is worked out under section 45-855.
45-865 Credit rule
(1) When the Commissioner:
(a) makes an assessment of the income tax that the *head company of a *consolidated group is liable to pay for a *consolidation transitional year for the head company; or
(b) determines that the head company does not have a taxable income for that year, or that no income tax is payable on its taxable income for that year;
the head company is, in addition to any credit to which it is entitled under section 45-30 for that year, entitled to a credit in relation to instalments payable by an entity that is a *subsidiary member of the group at any time during that year.
(2) The credit is equal to:
(a) the sum of so much of each instalment payable by the entity (even if it has not paid it) for an *instalment quarter of a *consolidation transitional year for the entity, or for that year, as is reasonably attributable to so much of that quarter or year:
(i) which is, or is included in, the consolidation transitional year for the *head company; and
(ii) during which the entity is a *subsidiary member of the group;
minus
(b) the sum of so much of each credit that the entity has claimed under section 45-215 or 45-420 for each instalment quarter covered by paragraph (a) as is reasonably attributable to:
(i) for a credit under section 45-215 - so much of the preceding instalment quarters of that consolidation transitional year for the entity which is covered by subparagraphs (a)(i) and (ii); or
(ii) for a credit under section 45-420 - so much of that instalment quarter and the preceding instalment quarters of that consolidation transitional year for the entity which is covered by subparagraphs (a)(i) and (ii).
45-870 Head company's liability to GIC on shortfall in quarterly instalment
Liability for the general interest charge
(1) Subject to subsections (3) and (4), the *head company of a *consolidated group is liable to pay the *general interest charge under this section for an *instalment quarter in a *consolidation transitional year for the head company if:
(a) the instalment payable by at least one *member of the group for that quarter is worked out:
(i) under paragraph 45-112(1)(b) or (c); or
(ii) by using an instalment rate under section 45-205; and
(b) the sum of instalments payable by the members of the group for that quarter, reduced by credits claimed by those members under section 45-215 or 45-420 for that quarter, is less than 17/80 of the head company's *benchmark tax for that consolidation transitional year.
Note: 17/80 of the head company's benchmark tax represents an amount that is 85% of one quarter of that benchmark tax.
Amount on which the charge is payable
(2) Subject to subsections (3) and (4), the *general interest charge is payable on the amount worked out in accordance with the following method statement (if the amount is a positive amount).
Method statement
Step 1. Work out the amount that is 1/4 of the *benchmark tax of the *head company for that *consolidation transitional year of that head company.
Step 2. Work out the sum of instalments that would have been payable by all the *members of the group for that *instalment quarter of that *head company if none of the members had worked out its instalment for that quarter under paragraph 45-112(1)(b) or (c) or by using an instalment rate under section 45-205.
Step 3. Work out the sum of instalments payable by all the *members of the group for that *instalment quarter, reduced by credits claimed by the members under section 45-215 or 45-420 for that quarter.
Step 4. Reduce the lesser of the results of steps 1 and 2 by the result of step 3. The result of this step is the amount on which the *general interest charge is payable if it is a positive amount. No general interest charge is payable if the result of this step is nil or a negative amount.
Amounts of instalments or credits that are taken into account
(3) In working out an amount of instalment or credit for a *subsidiary member of the group for the purposes of any of the following provisions:
(a) paragraph (1)(b);
(b) step 2 or 3 of the method statement;
take into account only an amount of instalment or credit covered by that provision that is reasonably attributable to a period in that *consolidation transitional year of the *head company during which it is a subsidiary member of the group.
Members having different instalment quarters
(4) In working out an amount of instalment or credit for a *subsidiary member whose *instalment quarters differ from those of the *head company for the purposes of any of the following provisions:
(a) paragraph (1)(a) or (b);
(b) step 2 or 3 of the method statement;
a reference to an instalment quarter in a *consolidation transitional year of the head company in any of those provisions includes a reference to the last instalment quarter of that subsidiary member ending before the end of that instalment quarter of the head company.
45-875 Other rules about the general interest charge
(1) The *general interest charge under section 45-870 for an *instalment quarter in an income year is payable by the *head company for each day in the period that:
(a) started at the beginning of the day by which the instalment for that quarter was due to be paid; and
(b) finishes at the end of the day on which the head company's assessed tax for that income year is due to be paid.
(2) The Commissioner must give the *head company written notice of the *general interest charge. The head company must pay the charge within 14 days after the notice is given to the head company.
(3) If any of the *general interest charge remains unpaid at the end of the 14 days, the *head company is also liable to pay the general interest charge on the unpaid amount for each day in the period that:
(a) starts at the end of those 14 days; and
(b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid:
(i) the unpaid amount;
(ii) general interest charge on the unpaid amount.
(4) The Commissioner may, if he or she is satisfied that because special circumstances exist it would be fair and reasonable to do so, remit the whole or any part of any *general interest charge payable under section 45-870.