New Business Tax System (Consolidation, Value Shifting, Demergers and Other Measures) Act 2002 (90 of 2002)

Schedule 9   Consolidation: transitional provisions for international tax

Income Tax (Transitional Provisions) Act 1997

2   At the end of Part 3-90

Add:

Division 717 - International tax rules

717-15 Head company's accelerated access to joining entity's excess foreign tax credits from earlier years

(1) This sectionoperates in relation to an income year if:

(a) a consolidated group came into existence during an income year (the current year ); and

(b) the current year ended before 1 July 2004; and

(c) section 160AFE of theIncome Tax Assessment Act 1936 as amended by theNew Business Tax System (Consolidation, Value Shifting, Demergers and Other Measures) Act 2002 applies in relation to the head company of the consolidated group for the current year; and

(d) an entity (the joining entity ) became a subsidiary member of a consolidated group at a time (the joining time ) during the current year; and

(e) the condition in subsection (2) is satisfied.

(2) The condition is that the joining entity and the head company of the group were members of the same wholly-owned group:

(a) if the joining time was the start of the current year or the time the joining entity came into existence - at the joining time; or

(b) otherwise - throughout the period:

(i) beginning at the start of the current year, or the time the joining entity came into existence (whichever is later); and

(ii) ending at the joining time.

(3) For the purposes of section 717-15 of theIncome Tax Assessment Act 1997 in relation to the current year, the reference in subparagraph 717-15(1)(b)(i) of that Act to the start of that income year is taken to be a reference to the end of that income year.

717-20 Head company's accelerated access to joining entity's excess foreign tax credits from joining year

(1) This section operates if:

(a) a consolidated group came into existence during an income year (the current year ); and

(b) the current year ended before 1 July 2004; and

(c) section 160AFE of theIncome Tax Assessment Act 1936 as amended by theNew Business Tax System (Consolidation, Value Shifting, Demergers and Other Measures) Act 2002 applies in relation to the head company of the consolidated group for the current year; and

(d) an entity (the joining entity ) became a subsidiary member of the consolidated group at a time (the joining time ) during the current year; and

(e) the condition in subsection (2) is satisfied; and

(f) the joining entity had excess foreign tax credits from the earliest non-membership period (under section 701-30 of theIncome Tax Assessment Act 1997) in the current year.

(2) The condition is that the joining entity and the head company of the consolidated group were members of the same wholly-owned group:

(a) if the joining time was the start of the current year or the time the joining entity came into existence - at the joining time; or

(b) otherwise - throughout the period:

(i) beginning at the start of the current year, or the time the joining entity came into existence (whichever is later); and

(ii) ending at the joining time.

(3) Section 160AFE of theIncome Tax Assessment Act 1936 operates in relation to the head company of the consolidated group for the current year as if:

(a) subsection 160AFE(4) of that Act provided that the amount of the excess foreign tax credits mentioned in paragraph (1)(f) of this section was the amount of the head company's excess foreign tax credits from an earlier year of income (the notional year ); and

(b) paragraphs 160AFE(3)(a) and (b) of that Act provided that the excess foreign tax credits from the notional year should be applied before the other credits mentioned in those paragraphs.

717-25 No double counting of foreign tax

To avoid doubt, sections 717-15 and 717-20 do not operate so as to result in an amount of foreign tax (within the meaning of theIncome Tax Assessment Act 1936) being counted twice for the purposes of section 160AF of that Act.

[The next Division is Division 820.]