-
Consolidation Reference Manual
- C1 Eligibility
C1-0 About this section- C1-1 Eligibility tests and rules
- C1-2 Business structures and eligibility
- C2 Assets
- C2-0 About this section
- C2-1-000 Treatment of assets
- C2-1 Treatment of Assets
- C2-1-10 Overview of cost setting process on formation and entry (including transitional rules)
- C2-1-20 Calculating the entry ACA (step A)
- C2-1-30 Allocating the entry ACA (steps B to E)
- C2-1-40 Modifications to entry cost setting rules
- C2-1-50 Dealing with errors in TCSAs and changes in liabilities when discharged
- C2-1-60 Cost setting on exit
- C2-1-70 Treatment of special classes of assets
- C2-1-80 Withdrawn 6 May 2011
- C2-1-310 Linked assets and liabilities
- C2-1-410 CGT events arising out of the cost setting rules
- C2-2 High-level worked example
- Cost setting on entry
- C2-2-110 The cost setting process on entry
- C2-2-120 Consolidated group join another consolidated group
- C2-2-130 Linked entities join a consolidated group
- C2-2-140 A trust joins a consolidated group
- C2-2-150 Partnership - all partners join consolidated group
- C2-2-155 Partnership - not all partners join consolidated group
- Cost setting on exit
- C2-2-210 The cost setting process on exit
- C2-3 Worksheets
- C2-3-110 Entry ACA worksheet
- C2-3-210 Over-depreciation worksheet
- C2-4 Worked examples - cost setting on entry
- General
- C2-4-105 Transitional entities and chosen transitional entities
- Entry step A (ACA calculation)
- C2-4-205 Calculating the ACA for non-chosen subsidiary partly held by chosen transitional entity
- C2-4-220 Amount to be used as cost for membership interests (ACA step 1)
- C2-4-240 Reduction for intragroup liabilities on entry (in ACA step 2)
- C2-4-241 Adjustment for employee shares (in ACA step 2)
- C2-4-242 Determining the amount of a deferred tax liability to be used at ACA step 2, including use of administrative short cuts
- C2-4-245 Adjustment at ACA step 2 to allow for timing differences between accounting and tax recognition of liabilities
- C2-4-246 Withdrawn 6 May 2011
- C2-4-260 Estimating undistributed, frankable profits accruing to group before joining time (ACA step 3)
- C2-4-261 Determining undistributed, taxed (frankable) profits accrued to group before joining time (ACA step 3)
- C2-4-270 Pre-joining time rollover from foreign-resident company or a company that becomes the head company (ACA step 3A)
- C2-4-280 Adjustment at formation for distributions of profits to head company (ACA step 4)
- C2-4-300 Adjustments for losses (ACA steps 5 and 6)
- C2-4-340 Adjustment for certain inherited deductions (ACA step 7)
- Entry step B (allocate to retained cost base assets)
- C2-4-410 Tax cost setting amount for retained cost base assets - entitlement to pre-paid services
- Entry step C (allocate to reset cost base assets)
- C2-4-520 Tax cost setting amount for goodwill
- C2-4-530 Reduction for revenue-like assets (step C)
- C2-4-540 Adjustment for ACA allocation at formation to membership interests in subsidiaries with owned profits (step C)
- Entry Step D (adjust for over-depreciated assets)
- C2-4-605 Reduction for privatised depreciating assets (at step D)
- C2-4-610 Reduction for over-depreciated assets (step D)
- C2-4-640 Reduction for over-depreciated assets (step D) - administrative short cuts
- Entry Step E (adjust for certain revenue-like assets)
- C2-4-710 Limiting the tax cost setting amounts of revenue-like assets (step E)
- Pre-CGT assets on entry
- C2-4-810 Pre-CGT factor for assets of a joining entity
Note These pre-CGT factor rules apply to an entity that joined a consolidated group before 10 February 2010 unless the head company makes a choice for the new pre-CGT proportion rules to apply. For details of the new pre-CGT proportion rules that apply from 10 February 2010 see
[rarr ]
'Pre-CGT status of membership interests in a joining entity - pre-CGT proportion rules',
C2-4-813
.
- C2-4-813 Pre-CGT status of membership interests in a joining entity - pre-CGT proportion rules
- C2-4-820 Pre-CGT factor for assets where subsidiary has membership interests in another member - formation before 10 February 2010
- C2-4-855 Applying the continuing majority-owned entity test to multi-tiered structures
- C2-5 Worked examples - cost setting on exit
- Entry step A (ACA calculation)
- C2-5-220 Increase for certain privatised depreciating assets
- C2-5-240 - Adjustment for certain inherited deductions
[atonl ]
(
exit ACA step 2
)
- C2-5-260 Adjustment for intragroup liabilities owed to a leaving entity on exit (in exit ACA step 3)
- Pre-CGT assets on exit
- C2-5-710 Pre-CGT membership interests in a leaving entity
- C2-5 Appendix
- C2-5-713 Pre-CGT membership interests in a leaving entity - pre-CGT proportion rules
- C2-5-715 Calculating pre-CGT membership interests in a multiple exit case (with pre-CGT factor attached to assets)
- C2-5-715 Appendix
- C2-5-720 Consolidated and MEC groups - CGT rollover relief
- internally generated assets
- C2-5-810 Continuing majority-owned entity and internally generated assets
- C2-6 Loss integrity measures and general value shifting regime
- C2-6-110 Effect of Subdivision 165-CC for steps 1 and 2 of the ACA calculation at formation and joining times
- C2-6-120 Effect of Subdivision 165-CC where an entity leaves a consolidated group
- C2-6-130 Effect of Subdivision 165-CD for consolidated groups
- C2-6-140 Effect of Subdivision 165-CC for MEC groups
- C2-6-150 Effect of Subdivision 165-CD for MEC groups
- C2-6-155 Subdivision 165-CD widely held company concession for an eligible tier-1 company that is head company of a consolidated or MEC group
- C2-6-160 Application of the loss reduction method to consolidated and MEC groups
- C2-6-170 General value shifting regime (GVSR)
- Worked examples
- C2-6-510 Formation time treatment of assets owned by head company from a pre-consolidation changeover time
- C2-6-520 Pre-formation changeover times - application of Subdivision 165-CC at formation (transitional period)
- C2-6-530 Treatment of assets owned by head company at both formation time and pre-consolidation changeover time (no changeover time at formation)
- C2-6-540 All assets in head company's loss denial pool become assets of leaving entity
- C3 Losses
- C3-0 About this section
- C3-1 Treatment of losses
- C3-2 High-level worked example
- C3-2-110 Consolidation loss provisions
- C3-3 Worked example - loss transfer
- Establishing the unutilised loss
- C3-3-105 Utilising loss in non-membership period - non-membership period is taken to include joining time
- C3-3-110 Establishing unutilised loss at transfer time - single joining time and prior year loss case
- C3-3-120 Establishing unutilised loss at transfer time - multiple joining times and prior year and current year loss case
- Transfer testing
- C3-3-210 Transfer testing where no ownership or control failure - single joining time and joining year loss case
- C3-3-220 Transfer testing where ownership or control failed - single joining time and pre-1 July 1999 year loss case
- C3-3-230 Transfer testing with modified same business test - where ownership or control failed before trial year but after loss year
- C3-3-240 Transfer testing with modified same business test - where ownership or control failure in trial year but after loss year
- C3-3-245 Transfer testing with modified same business test - where head company transfers losses to itself
- C3-3-246 Transfer testing with modified same business test - acquisition of another consolidated group
- C3-3-250 Additional test for second or subsequent transfer of a loss previously transferred because the SBT was passed
- C3-3-260 Transfer testing where Subdivision 165-CC applies to a net capital loss that is unutilised at the joining time
- C3-3-270 Transfer testing where control or ownership failure and a change in business within the non-membership period
- C3-4 Worked example - loss utilisation
- Calculating the available fraction
- C3-4-110 Modified market value of a single joining entity
- C3-4-120 Calculating an available fraction - losses transferred for the first time where there has been a pre-joining injection of capital
- Applying the value donor concession
- C3-4-210 Adding to modified market value to reflect loss transferability
- C3-4-220 Including value donor's losses in real loss-maker's bundle
- C3-4-230 Adding to modified market value to reflect loss transferability - loss made for an income year ending just before the initial transfer time
- C3-4-240 Adding to modified market value to reflect loss transferability - bundle includes foreign loss
- C3-4-250 Modified market value is nil where company has negative net assets
- C3-4-255 Donating a value donor's loss where modified market value is added to the value donor (in the capacity of a real loss-maker)
- C3-4-256 Losses transferred from members that are in liquidation can be used as basis for value and loss donation
- C3-4-260 Group waiver rule - disregarding reductions to modified market value caused by intragroup injections of capital
- C3-4-270 Single waiver rule - disregarding a reduction to modified market value caused by an injection of capital from a value donor
- Adjusting the available fraction
- C3-4-310 Adjusting available fraction - previously transferred losses are transferred again
- C3-4-320 Adjusting available fraction - transferred losses and group losses are transferred at the same time
- C3-4-330 Adjusting available fraction - another loss entity joins the group
- C3-4-340 Adjusting the available fraction - post-consolidation events that increase market value of group
- C3-4-341 Adjusting available fraction - post-consolidation injection of capital into subsidiary member
- C3-4-342 Adjusting available fraction - post-consolidation injection of capital where head company issues shares in scrip for scrip merger
- C3-4-343 Adjusting available fraction - multiple adjustments under a scrip for scrip acquisition
- C3-4-350 Adjusting available fraction - sum of available fractions is more than one
- Amount that can be utilised
- C3-4-410 Amount of transferred losses that can be utilised
- C3-4-415 Amount of transferred losses that can be utilised - franking offsets
- C3-4-416 Amount of transferred losses that can be utilised - application of paragraph 36-17(5)(a)
- C3-4-417 Amount of transferred losses that can be utilised - application of paragraph 36-17(5)(b)
- C3-4-420 Amount of transferred losses that can be utilised - exempt income
- C3-4-430 Amount of losses that can be utilised - transferred tax losses utilised before group tax losses
- C3-4-440 Determining if a transferred loss can be utilised - COT transfer case
- C3-4-450 Cessation of a consolidated group - application of the same business test to the former head company
- Utilisation - special circumstances
- C3-4-510 Transferred loss utilisation using value donor concession with transferred foreign losses
- C3-4-520 Concessional method for utilising transferred losses
- C3-4-525 Concessional method for utilising transferred losses - consolidation part-way through income year
- C3-4-530 Utilisation of transferred losses using both concessional and available fraction methods
- C3-4-540 Amount of CGT event L1 capital loss that can be utilised
- C3-4-550 Transitional foreign loss makers
- C3-4-560 Foreign loss component of a tax loss
- C3-4-570 Transfer and utilisation of a tax loss with a foreign loss component where the loss maker joins part-way through the head company's income year
- Apportioning use of transferred losses
- C3-4-610 Apportioning the use of transferred losses
- C3-4-620 Apportioning the use of the head company's own losses
- C3-4-630 Apportioning the use of transferred losses in formation year
- Transfer of losses to Australian branch of a foreign bank
- C3-4-710 Transfer of tax losses from head company of consolidated group to Australian branch of a foreign bank
- C3-5 Transfer tax losses
- C3-5 Transfer of tax losses under Subdivision 170-A - consolidation part-way through the head company's income year
- C3-5-110 Transfer of subsidiary member tax losses under Subdivision 170-A - consolidation part-way through the head company's income year
- C3-5-120 Transfer of a group tax loss under Subdivision 170-A - consolidation part-way through the head company's income year
- C3-5-130 Late loss transfers under Subdivision 170-A - consolidation and the Commissioner's discretion
- C3-6 Determining the reduction amount - subsection 707-325(3)
- C3-6 Determining the reduction amount - subsection 707-325(3)
- C3-6-110 Determining the reduction amount - multiple events - determining the initial increase in market value
- C3-6-120 Determining the reduction amount - diminution in value up to the joining time
- C3-6-130 Determining the reduction amount - injection of capital that does not result in increased modified market value
- C3-6-140 Determining the reduction amount - compounding of value up to the joining time
- C3-6-150 Determining the reduction amount - injection of capital subsequently injected into a subsidiary
- C3-6-160 Determining the reduction amount - multiple events - market value reduced under some events
- C4 Market valuation
- C4-1 Market valuation
- C4-1-000 Market valuation
- C4-1 Market valuation guidelines
- C4-1-110 Withdrawn 6 May 2011
- C4-2 Tax determinations
- C4-2-110 Withdrawn 6 May 2011
- C4-2-120 Withdrawn 6 May 2011
- C5 Franking credits
- C5-0 About this section
- C5-1 Treatment of franking credits
- C5-2 Worked examples:
- C5-2-110 Franking accounts in consolidated groups
- C6 International
- C6-0 About this section
- C6-1 Treatment of foreign income tax offsets, attribution surpluses and conduit foreign income
- C6-1-000 Treatment of foreign income tax offsets, attribution surpluses and conduit foreign income
- C6-1-110 Thin capitalisation and consolidated groups
- C6-1-210 Foreign bank branches and consolidated groups
- C6-2 Worked example
- C6-2-110 Pooling of excess foreign tax credits
- C6-2-120 Foreign income tax offsets - transitional rules
- C6-2-130 Calculating the foreign income tax offset
- Withdrawn 6 May 2011
- C6-2-210 Transfer of attribution surpluses
- C6-2-310 Transfer of foreign dividend account balance
- C6-2-410 Treatment of conduit foreign income
- C7 Making a choice in writing - and notifying
- C7-0 About this section
- C7-1 General Information
- C7-1-110 Choice in writing
- C7-1-120 Consolidated groups - notices to be given to the Commissioner
- C7-1-220 Impact of liquidation and deregistration
- C7 Notify formation, change membership
- C7-2 Notification Forms
- C7-2-110 Withdrawn 6 May 2011
- C7-2-120 Withdrawn 6 May 2011
- C7-2-130 Notification of head company no longer eligible: group ceases to exist
- C8 PAYG instalments
- C8-0 About this section
- C8-1 Treatment of PAYG instalments
- C8-1-110 Completing the Consolidated activity statement
- C8-2 Forms
- C8-2-110 Consolidated activity statement
- C9 Tax liabilities
- C9-0 About this section
- C9-1 General Information
- C9-1-110 Single entity treatment
- C9-1-115 Application of the consolidation provisions to cooperative companies
- C9-1-120 Income recognition - method used by head company
- C9-1-130 Tax-related expenses - post-consolidation expenses relating to a subsidiary's tax affairs
- C9-1-220 Application of Part IVA to elections to consolidate
- C9-2 Record keeping guidelines and checklist
- C9-3-000 Withdrawn 6 May 2011
- C9-4 Special circumstances
- C9-4-110 Substituted accounting period (SAP)
- C9-5 Worked examples:
- C9-5-110 Calculating taxable income, income tax and losses for non-membership periods
- C9-5-120 Partners and partnerships - applying the part-year provisions
- C9-5 Worked example
- C9-5-150 Effect of entry history rule
- C9-5-210 Aligning income/deductions with services - arrangements between prospective fellow members
- C9-5-220 Single entity treatment - deductibility of interest
- C9-5-230 Single entity treatment - sale of intragroup asset to non-member
- C9-5-240 - Capital benefit paid in substitution for dividends
- C9-5-310 Capital allowances -
with
accelerated depreciation
- C9-5-315 Capital allowances -
without
accelerated depreciation
- C9-5-320 Treatment of trading stock brought into the group
- C9-5-330 Prepayment transitional rules - group consolidates 1 July 2002
- C9-5-340 Withdrawn 12 September 2006
- C9-5-341 Consumables brought into a group (transitional option)
- C9-5-350 Deducting a bad debt - company that is owed debt becomes member of consolidated group
- C9-5-351 Deducting a bad debt - company that is owed debt experiences majority ownership change when it joins consolidated group
- C9-5-352 Deducting a bad debt - company that is owed debt joins consolidated group that later ceases to exist
- C9-5-810 Effect of exit history rule
- C9-6 Life insurance companies
- C9-6-110 Treatment of life insurance companies
- C9-6-510 Modified membership rules for consolidated groups that include a life insurance company
- C9-6-512 Modified membership rules for a joining life insurance company's wholly-owned subsidiary held indirectly through one or more interposed entities
- C9-6-520 Modified cost setting rules for consolidated groups that include a life insurance company
- C9-6-530 Withdrawn 6 May 2011
- C9-6-540 Value of the net risk component of life insurance policies when a life insurance company joins or leaves a consolidated group
- C9-6-550 Franking surpluses held by life insurance subsidiaries
- C9-7 Tax sharing agreements
- C9-7-110 Tax sharing agreements
- C9-7-510 Tax sharing agreement based on percentage of profit methodology - worked example
- C10 MEC groups
- C10-0 About this section
- C10-1 Multiple entry consolidated (MEC) groups
- C10-1-000 MEC groups
- C10-1-110 MEC groups - notices to be given to the Commissioner
- C10-1-210 Group conversions
- C10-2 Worked example
- Formation and conversion
- C10-2-110 Choice on formation, special conversion events and acquisition of new eligible tier-1 companies
- C10-2-115 Original and new eligible tier-1 companies of a MEC group
- C10-2-120 Transitional provision for foreign-held, Australian-resident subsidiaries to be members of a MEC group
- C10-2-130 Provisional head company
- C10-2-140 A consolidated group is created from a MEC group
- Cost setting at joining and formation
- C10-2-210 Cost setting rules for assets of a MEC group - at joining and formation times
- C10-2-215 Tax cost setting of assets - expansion of a MEC group to include new eligible tier-1 companies
- Losses
- C10-2-310 Adjusting available fraction - a new eligible tier-1 company joins a MEC group
- C10-2-320 Apportioning the use of losses - new eligible tier-1 company joins part-way through income year
- C10-2-325 MEC groups and losses - determining whether the focal company satisfies the continuity of ownership test
- C10-2-330 Identifying the test company to determine continuity of ownership of the focal company in a MEC group (COT transfer of losses)
- C10-2-340 Identifying the test company to determine continuity of ownership of the focal company in a MEC group (SBT satisfied)
- C10-2-350 Determining the start of a test company's loss year to assess the continuity of ownership of the focal company in a MEC group (COT transfer of a loss)
- C10-2-360 Determining the start of a test company's loss year to assess continuity of ownership of the focal company in a MEC group (special conversion event)
- C10-2-370 Freezing the ownership of the test company - COT transfer of a loss to the head company of a MEC group
- C10-2-380 Freezing the ownership structure of a MEC group - when a loss-making company becomes head company of the group
- C10-2-390 Continuity of a potential MEC group when the identity of the top company changes - assumptions about the test company failing the COT
- C10-2-391 Assumptions about the test company failing the COT - potential MEC group ceases to exist
- C10-2-392 Assumptions about the test company failing the COT - MEC group ceases to exist because there ceases to be a provisional head company
- C10-2-395 Acquisition of part of a MEC group - transfer of losses to newly formed consolidated group
- Cost setting at leaving
- C10-2-410 Events that trigger pooling in a MEC group
- C10-2-420 Pooling of external membership interests
- C10-2-430 An eligible tier-1 company leaving a MEC group
- C10-3 Sample Forms
- C10-3-110 Withdrawn 6 May 2011
- C10-3-120 Withdrawn 6 May 2011
- C10-3-130 Withdrawn 6 May 2011
- C10-3-140 Withdrawn 6 May 2011
- C10-3-150 Withdrawn 6 May 2011
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