New Business Tax System (Consolidation and Other Measures) Act 2003 (16 of 2003)

Schedule 9   Consolidation: foreign dividend accounts

Part 1   Basic amendments

Income Tax Assessment Act 1997

2   At the end of Division 719

Add:

Subdivision 719-X - International tax rules

Table of sections

Foreign dividend accounts

719-900 General rules about foreign dividend accounts

719-905 Transfer of balance of foreign dividend accounts on change in identity of provisional head company

Foreign dividend accounts

719-900 General rules about foreign dividend accounts

(1) This section modifies the effect that Subdivision 717-J has in relation to a *MEC group because of section 719-2.

Note: Except as provided by this section, section 719-2 gives Subdivision 717-J effect in relation to a MEC group in a way corresponding to the way in which that Subdivision has effect in relation to a consolidated group.

(2) Subdivision 717-J has effect in relation to the *provisional head company of the *MEC group in a way corresponding to the way in which that Subdivision has effect in relation to the *head company of a *consolidated group.

(3) Subdivision 717-J has effect as if:

(a) the company that is the *provisional head company of the *MEC group at a time were not a *subsidiary member of the group at the time; and

(b) each company that is a *member of the MEC group at the time and is not the provisional head company at the time were a subsidiary member of the group at the time.

719-905 Transfer of balance of foreign dividend accounts on change in identity of provisional head company

(1) This section operates if:

(a) a *cessation event happens to the *provisional head company (the old company ) of a *MEC group; and

(b) another company (the new company ) is appointed as the provisional head company of the group under subsection 719-60(3).

Note: The appointment of the new company as the provisional head company of a MEC group under subsection 719-60(3) is taken to have come into force immediately after the cessation event.

(2) If there was an *FDA surplus for the old company at the time of the *cessation event:

(a) an *FDA debit equal to the FDA surplus arises for the old company at the time of the cessation event; and

(b) an *FDA credit equal to the FDA surplus arises for the new company when it is appointed.

(3) If the old company's total *FDA debits arising before the time of the *cessation event exceeded its total *FDA credits arising before that time:

(a) an FDA credit equal to the excess arises for the old company at the time of the cessation event; and

(b) an FDA debit equal to the excess arises for the new company when it is appointed.

[The next Division is Division 721.]