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This is a Bill, not an Act. For current law, see the Acts databases.
2016-2017-2018
The Parliament of the
Commonwealth of Australia
HOUSE OF REPRESENTATIVES
Presented and read a first time
Treasury Laws Amendment (Income Tax
Consolidation Integrity) Bill 2018
No. , 2018
(Treasury)
A Bill for an Act to amend the law in relation to
taxation, and for related purposes
No. , 2018
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
i
Contents
1
Short title ........................................................................................... 1
2
Commencement ................................................................................. 1
3
Schedules ........................................................................................... 2
Schedule 1--Consolidation
3
Part 1--Deductible liabilities
3
Income Tax Assessment Act 1997
3
Part 2--Deferred tax liabilities
6
Income Tax Assessment Act 1997
6
Part 3--Securitised assets: 2014 Budget
8
Income Tax Assessment Act 1997
8
Part 4--Securitised assets: 2016 Budget
13
Income Tax Assessment Act 1997
13
Part 5--Churning
14
Income Tax Assessment Act 1997
14
Part 6--TOFA
17
Income Tax Assessment Act 1997
17
Part 7--Value shifting
21
Income Tax Assessment Act 1997
21
Part 8--Commencement of arrangements
25
No. , 2018
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
1
A Bill for an Act to amend the law in relation to
1
taxation, and for related purposes
2
The Parliament of Australia enacts:
3
1 Short title
4
This Act is the Treasury Laws Amendment (Income Tax
5
Consolidation Integrity) Act 2018.
6
2 Commencement
7
(1) Each provision of this Act specified in column 1 of the table
8
commences, or is taken to have commenced, in accordance with
9
column 2 of the table. Any other statement in column 2 has effect
10
according to its terms.
11
12
2
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
No. , 2018
Commencement information
Column 1
Column 2
Column 3
Provisions
Commencement
Date/Details
1. Sections 1 to 3
and anything in
this Act not
elsewhere covered
by this table
The day this Act receives the Royal Assent.
2. Schedule 1,
Parts 1, 2 and 3
The first 1 January, 1 April, 1 July or
1 October to occur after the day this Act
receives the Royal Assent.
3. Schedule 1,
Part 4
Immediately after the commencement of the
provisions covered by table item 2.
4. Schedule 1,
Parts 5 to 8
The first 1 January, 1 April, 1 July or
1 October to occur after the day this Act
receives the Royal Assent.
Note:
This table relates only to the provisions of this Act as originally
1
enacted. It will not be amended to deal with any later amendments of
2
this Act.
3
(2) Any information in column 3 of the table is not part of this Act.
4
Information may be inserted in this column, or information in it
5
may be edited, in any published version of this Act.
6
3 Schedules
7
Legislation that is specified in a Schedule to this Act is amended or
8
repealed as set out in the applicable items in the Schedule
9
concerned, and any other item in a Schedule to this Act has effect
10
according to its terms.
11
Consolidation Schedule 1
Deductible liabilities Part 1
No. , 2018
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
3
Schedule 1--Consolidation
1
Part 1--Deductible liabilities
2
Income Tax Assessment Act 1997
3
1 Before subsection 705-70(2)
4
Insert:
5
Exclusion for deductible liability
6
(1AA) Subsection (1AB) applies if:
7
(a) the accounting liability is covered by subsection (1AC); and
8
(b) assuming that the
*
head company had made a payment to
9
discharge the accounting liability to the extent that it is
10
covered under that subsection just after the joining time, that
11
payment would result in an amount equal to all or part of the
12
accounting liability being a deduction to the head company of
13
the group.
14
(1AB) An amount is not to be added for the accounting liability under
15
subsection (1) to the extent of that deduction.
16
(1AC) A liability is covered by this subsection except to the extent that:
17
(a) any of the following provisions apply in relation to the
18
liability:
19
(i) section 713-520 (certain liabilities etc. of life insurance
20
company that joins a consolidated group);
21
(ii) section 715-375 (accounting liabilities that are, or are
22
part of, a Division 230 financial arrangement held by an
23
entity that joins a consolidated group); or
24
(b) section 713-515 (certain assets taken to be retained cost base
25
assets where life insurance company joins a consolidated
26
group) applies in relation to an asset to which the liability
27
relates; or
28
(c) the liability is any of the following:
29
(i) the outstanding claims liability of a
*
general insurance
30
company, or a private health insurer (within the
31
meaning of the Private Health Insurance (Prudential
32
Schedule 1 Consolidation
Part 1 Deductible liabilities
4
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
No. , 2018
Supervision) Act 2015), under
*
general insurance
1
policies;
2
(ii) the unearned premium liability of a general insurance
3
company, or a private health insurer (within the
4
meaning of that Act), under general insurance policies;
5
(iii) the unexpired risk liability of a general insurance
6
company, or a private health insurer (within the
7
meaning of that Act), under general insurance policies;
8
or
9
(d) the liability arises under any of the following:
10
(i) a
*
retirement village residence contract;
11
(ii) a
*
retirement village services contract.
12
(1AD) To avoid doubt, for the purposes of paragraph (1AC)(c),
13
section 713-710 (certain liabilities, reserves, costs etc. of general
14
insurance company that joins or leaves a consolidated group) does
15
not affect the amount of the liability.
16
2 Before subsection 705-75(1)
17
Insert:
18
Application
19
(1A) This section applies to an accounting liability to the extent that it is
20
a liability of a kind described in:
21
(a) paragraph 705-70(1AC)(c); or
22
(b) paragraph 705-70(1AC)(d).
23
3 Before subsection 705-80(1)
24
Insert:
25
Application
26
(1A) This section applies to an accounting liability to the extent that it is
27
a liability of a kind described in:
28
(a) paragraph 705-70(1AC)(c); or
29
(b) paragraph 705-70(1AC)(d).
30
Consolidation Schedule 1
Deductible liabilities Part 1
No. , 2018
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
5
4 Paragraph 705-80(1)(a) (example)
1
Repeal the example.
2
5 After subsection 705-90(2A)
3
Insert:
4
(2B) Also, if an amount is not added under subsection 705-70(1) for an
5
accounting liability to an extent because of
6
subsection 705-70(1AB), the accounting liability is not to be taken
7
into account, to that extent, in working out the undistributed
8
profits.
9
6 Application
10
The amendments made by this Part apply in relation to an entity that
11
becomes a subsidiary member of a consolidated group or MEC group if
12
the arrangement under which the entity becomes a subsidiary member
13
of the group commences (see Part 8 of this Schedule) on or after 1 July
14
2016.
15
Schedule 1 Consolidation
Part 2 Deferred tax liabilities
6
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
No. , 2018
Part 2--Deferred tax liabilities
1
Income Tax Assessment Act 1997
2
7 Subsection 705-70(1A)
3
Repeal the subsection, substitute:
4
Exclusion for deferred tax liability
5
(1B) An amount is not to be added for an accounting liability that is an
6
amount recorded in a deferred tax liability account in accordance
7
with the joining entity's
*
accounting principles for tax cost setting.
8
(1C) Subsection (1B) does not apply to an accounting liability that
9
relates to an asset mentioned in paragraph 713-515(1)(a) or (b)
10
(certain assets of life insurance company).
11
8 After subsection 711-45(1A)
12
Insert:
13
Exclusion for deferred tax liability
14
(1B) An amount is not to be added for an accounting liability that is an
15
amount recorded in a deferred tax liability account in accordance
16
with the leaving entity's
*
accounting principles for tax cost setting.
17
(1C) Subsection (1B) does not apply to an accounting liability that
18
relates to an asset mentioned in paragraph 713-575(2)(a) or (b)
19
(certain assets of life insurance company).
20
9 Application
21
(1)
The amendment made by item 7 of this Schedule applies in relation to
22
an accounting liability of an entity that becomes a subsidiary member of
23
a consolidated group or MEC group under an arrangement that
24
commences (see Part 8 of this Schedule) on or after the start of the day
25
on which the Bill that became this Act was introduced into the House of
26
Representatives.
27
Consolidation Schedule 1
Deferred tax liabilities Part 2
No. , 2018
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
7
(2)
The amendment made by item 8 of this Schedule applies in relation to
1
an accounting liability of an entity that ceases to be a subsidiary
2
member of a consolidated group or MEC group if the entity ceases to be
3
a subsidiary member of the group under an arrangement that
4
commences (see Part 8 of this Schedule) on or after the start of the day
5
on which the Bill that became this Act was introduced into the House of
6
Representatives.
7
Schedule 1 Consolidation
Part 3 Securitised assets: 2014 Budget
8
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
No. , 2018
Part 3--Securitised assets: 2014 Budget
1
Income Tax Assessment Act 1997
2
10 At the end of section 705-70
3
Add:
4
Exclusion of amounts for certain securitisation liabilities
5
(4) An amount is not to be added for an accounting liability of the
6
joining entity under subsection (1) if the accounting liability is
7
covered under section 705-76 (securitisation liabilities).
8
11 After section 705-75
9
Insert:
10
705-76 Liability arising from transfer or assignment of securitised
11
assets
12
This section covers an accounting liability (the securitisation
13
liability) if the following circumstances exist:
14
(a) at the joining time, a
*
member of the joined group is an
*
ADI
15
or a
*
financial entity;
16
(b) in working out the step 2 amount mentioned in
17
subsection 705-70(1) in relation to the joining entity, an
18
amount would be added under that subsection for the
19
securitisation liability (disregarding subsection 705-70(4));
20
(c) the joining entity transferred or equitably assigned one or
21
more assets (the underlying securitised assets) to another
22
entity before the joining time;
23
(d) the securitisation liability:
24
(i) arose from the transfer or equitable assignment of the
25
underlying securitised assets; and
26
(ii) is a liability of the joining entity at the joining time
27
(according to the joining entity's
*
accounting principles
28
for tax cost setting);
29
Consolidation Schedule 1
Securitised assets: 2014 Budget Part 3
No. , 2018
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
9
(e) the other entity was established for the purpose of
1
securitising assets;
2
(f) the underlying securitised assets were securitised in
3
accordance with that purpose before the joining time;
4
(g) at the joining time the
*
market value of the joining entity's
5
interest in the underlying securitised assets is nil, or is
6
substantially less than the amount of the securitisation
7
liability.
8
12 At the end of section 711-45
9
Add:
10
Exclusion of amounts for certain securitisation liabilities
11
(11) An amount is not to be added for an accounting liability of the
12
leaving entity if the accounting liability is covered under
13
section 711-46 (securitisation liabilities).
14
13 After section 711-45
15
Insert:
16
711-46 Liability arising from transfer or assignment of securitised
17
assets
18
This section covers an accounting liability (the securitisation
19
liability) if the following circumstances exist:
20
(a) just before the leaving time, a
*
member of the old group is an
21
*
ADI or a
*
financial entity;
22
(b) in working out the step 4 amount mentioned in
23
subsection 711-45(1) in relation to the leaving entity, an
24
amount would be added under that subsection for the
25
securitisation liability (disregarding subsection 711-45(11));
26
(c) a member of the old group transferred or equitably assigned
27
one or more assets (the underlying securitised assets) to
28
another entity before the leaving time;
29
(d) the securitisation liability:
30
(i) arose from the transfer or equitable assignment of the
31
underlying securitised assets; and
32
Schedule 1 Consolidation
Part 3 Securitised assets: 2014 Budget
10
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
No. , 2018
(ii) is a liability of the leaving entity at the leaving time
1
(according to the leaving entity's
*
accounting principles
2
for tax cost setting);
3
(e) the other entity was established for the purpose of
4
securitising assets;
5
(f) the underlying securitised assets were securitised in
6
accordance with that purpose before the leaving time;
7
(g) at the leaving time the
*
market value of the leaving entity's
8
interest in the underlying securitised assets is nil, or is
9
substantially less than the amount of the securitisation
10
liability.
11
14 Application
--joining case
12
(1)
The amendments made by items 10 and 11 of this Schedule apply in
13
relation to an entity that becomes a subsidiary member of a consolidated
14
group or MEC group under an arrangement that commences (see Part 8
15
of this Schedule) after the 2014 budget time.
16
(2)
Subject to subitems (3) and (6), the amendments made by items 10 and
17
11 of this Schedule also apply in relation to an entity (the joining entity)
18
that becomes a subsidiary member of a consolidated group or MEC
19
group under an arrangement that commences (see Part 8 of this
20
Schedule) on or before the 2014 budget time.
21
(3)
Subitem (2) does not apply if the Commissioner considers that it is
22
reasonable to conclude that:
23
(a) the circumstances mentioned in section 705-76 of the Income
24
Tax Assessment Act 1997 (as inserted by this Schedule)
25
existed in respect of the joining entity; and
26
(b) before the 2014 budget time, the head company of the group:
27
(i) worked out the group's allocable cost amount for the
28
joining entity; and
29
(ii) for the purposes of working out that allocable cost
30
amount, worked out the step 2 amount mentioned in
31
subsection 705-70(1) of that Act; and
32
(c) in working out that step 2 amount before the 2014 budget
33
time, the head company added the amount mentioned in
34
paragraph 705-76(b) of that Act (as inserted by this
35
Schedule).
36
Consolidation Schedule 1
Securitised assets: 2014 Budget Part 3
No. , 2018
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
11
(4)
Subitem (5) applies if:
1
(a) subitem (2) does not apply because of subitem (3); and
2
(b) the Commissioner considers that it is reasonable to conclude
3
that, before the 2014 budget time, the head company of the
4
group worked out a tax cost setting amount for the joining
5
entity's interest in the underlying securitised assets
6
mentioned in paragraph 705-76(c) of the Income Tax
7
Assessment Act 1997 (as inserted by this Schedule).
8
(5)
Reduce the group's allocable cost amount for the joining entity by the
9
tax cost setting amount mentioned in paragraph (4)(b).
10
(6)
Subitem (2) does not apply if the Commissioner considers that it is
11
reasonable to conclude that:
12
(a) the circumstances mentioned in section 705-76 of the Income
13
Tax Assessment Act 1997 (as inserted by this Schedule)
14
existed in respect of the joining entity; and
15
(b) the head company of the group first worked out the group's
16
allocable cost amount for the joining entity:
17
(i) after the 2014 budget time; and
18
(ii) before the commencement of this item.
19
(7)
In this item:
20
2014 budget time means 7.30 pm, by legal time in the Australian
21
Capital Territory, on 13 May 2014.
22
15 Application
--leaving case
23
(1)
The amendments made by items 12 and 13 of this Schedule apply in
24
relation to an entity that ceases to be a subsidiary member of a
25
consolidated group or MEC group under an arrangement that
26
commences (see Part 8 of this Schedule) after the 2014 budget time.
27
(2)
Subject to subitem (3), the amendments made by items 12 and 13 of this
28
Schedule also apply in relation to an entity (the leaving entity) that
29
ceases to be a subsidiary member of a consolidated group or MEC
30
group under an arrangement that commences (see Part 8 of this
31
Schedule) on or before the 2014 budget time.
32
(3)
Subitem (2) does not apply if the Commissioner considers that it is
33
reasonable to conclude that:
34
Schedule 1 Consolidation
Part 3 Securitised assets: 2014 Budget
12
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
No. , 2018
(a) the circumstances mentioned in section 711-46 of the Income
1
Tax Assessment Act 1997 (as inserted by this Schedule)
2
existed in respect of the leaving entity; and
3
(b) before the 2014 budget time, the head company of the group
4
(the old group):
5
(i) worked out the old group's allocable cost amount for
6
the leaving entity; and
7
(ii) for the purposes of working out that allocable cost
8
amount, worked out the step 4 amount mentioned in
9
subsection 711-45(1) of that Act; and
10
(c) in working out that step 4 amount before the 2014 budget
11
time, the head company added the amount mentioned in
12
paragraph 711-46(b) of that Act (as inserted by this
13
Schedule).
14
(4)
Subitem (5) applies if:
15
(a) subitem (2) does not apply because of subitem (3); and
16
(b) the Commissioner considers that it is reasonable to conclude
17
that, in working out that allocable cost amount before the
18
2014 budget time, the head company of the old group
19
included in the step 1 amount mentioned in
20
subsection 711-25(1) of the Income Tax Assessment Act 1997
21
an amount (the addition to step 1) in respect of the leaving
22
entity's interest in the underlying securitised assets
23
mentioned in paragraph 711-46(c) of that Act (as inserted by
24
this Schedule).
25
(5)
Increase the old group's allocable cost amount for the leaving entity by
26
the addition to step 1.
27
(6)
In this item:
28
2014 budget time means 7.30 pm, by legal time in the Australian
29
Capital Territory, on 13 May 2014.
30
Consolidation Schedule 1
Securitised assets: 2016 Budget Part 4
No. , 2018
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
13
Part 4--Securitised assets: 2016 Budget
1
Income Tax Assessment Act 1997
2
16 Paragraph 705-76(a)
3
Repeal the paragraph.
4
17 Paragraph 711-46(a)
5
Repeal the paragraph.
6
18 Application
--joining case
7
(1)
The amendment made by item 16 of this Schedule applies in relation to
8
an entity that becomes a subsidiary member of a consolidated group or
9
MEC group under an arrangement that commences (see Part 8 of this
10
Schedule) after the 2016 budget time.
11
(2)
In this item:
12
2016 budget time means 7.30 pm, by legal time in the Australian
13
Capital Territory, on 3 May 2016.
14
19 Application
--leaving case
15
(1)
The amendment made by item 17 of this Schedule applies in relation to
16
an entity that ceases to be a subsidiary member of a consolidated group
17
or MEC group under an arrangement that commences (see Part 8 of this
18
Schedule) after the 2016 budget time.
19
(2)
In this item:
20
2016 budget time means 7.30 pm, by legal time in the Australian
21
Capital Territory, on 3 May 2016.
22
Schedule 1 Consolidation
Part 5 Churning
14
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
No. , 2018
Part 5--Churning
1
Income Tax Assessment Act 1997
2
20 At the end of Subdivision 716-S
3
Add:
4
716-440 Membership interests in joining entity not subject to CGT
5
under Division 855--foreign entity ceasing to hold
6
interests
7
(1) Subsection (3) applies if:
8
(a) an entity (the joining entity) becomes a
*
subsidiary member
9
of a
*
consolidated group at a time (the joining time); and
10
(b) another entity (the disposing entity) ceased to hold
11
*
membership interests in the joining entity during the period
12
that:
13
(i) started 12 months before the joining time; and
14
(ii) ended immediately after the joining time; and
15
(c) a
*
CGT event happened because the disposing entity ceased
16
to hold the membership interests; and
17
(d) either:
18
(i) a
*
capital gain or
*
capital loss of the disposing entity
19
from the CGT event was disregarded because of the
20
operation of Division 855; or
21
(ii) if there had been a capital gain or capital loss of the
22
disposing entity from the CGT event, the capital gain or
23
capital loss would have been disregarded because of the
24
operation of Division 855; and
25
(e) section 701-10 (cost to head company of assets of joining
26
entity) applies to the joining entity's assets in respect of the
27
joining entity becoming a subsidiary member of the group
28
(disregarding subsection (2) of this section); and
29
(f) it is reasonable to conclude that, throughout the period
30
mentioned in paragraph (b), the sum of the
*
total
31
participation interests held by an entity (the control entity)
32
and its
*
associates in the joining entity was 50% or more; and
33
Consolidation Schedule 1
Churning Part 5
No. , 2018
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
15
(g) in a case where the control entity is not the disposing entity--
1
it is reasonable to conclude that the sum of the total
2
participation interests held by the control entity and its
3
associates in the disposing entity was 50% or more at the
4
time the CGT event happened.
5
(2) For the purposes of paragraphs (1)(f) and (g), in working out the
6
sum of the
*
total participation interests held by the control entity
7
and its
*
associates in another entity, take into account:
8
(a) a particular
*
direct participation interest; or
9
(b) a particular
*
indirect participation interest;
10
held in the other entity only once if it would otherwise be counted
11
more than once because the entity holding it is an associate of the
12
control entity.
13
(3) The following provisions do not apply to the joining entity's assets
14
in respect of the joining entity becoming a
*
subsidiary member of
15
the group:
16
(a) section 701-10 (cost to head company of assets of joining
17
entity);
18
(b) subsection 701-35(4) (setting value of trading stock at
19
tax-neutral amount);
20
(c) subsection 701-35(5) (setting value of registered emissions
21
unit at tax-neutral amount).
22
Note:
This subsection does not affect the application of subsection 701-1(1)
23
(the single entity rule).
24
(4) Subsection (5) applies if:
25
(a) an entity (the higher level entity) holds
*
membership
26
interests in the joining entity (whether directly or through one
27
or more interposed entities) at a time during the period
28
mentioned in paragraph (1)(b); and
29
(b) the higher level entity becomes a
*
subsidiary member of the
30
*
consolidated group at the joining time; and
31
(c) the requirement in paragraph (1)(b) is not satisfied
32
(disregarding subsection (5)); and
33
(d) the requirement in paragraph (1)(b) would be satisfied if the
34
reference in paragraph (1)(b) to membership interests in the
35
joining entity included a reference to membership interests in
36
the higher level entity.
37
Schedule 1 Consolidation
Part 5 Churning
16
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
No. , 2018
(5) Treat the reference in paragraph (1)(b) to
*
membership interests in
1
the joining entity as including a reference to membership interests
2
in the higher level entity.
3
21 Application
4
(1)
The amendments made by this Part apply in relation to an income year
5
in respect of an entity that becomes a subsidiary member of a
6
consolidated group or MEC group under an arrangement that
7
commences (see Part 8 of this Schedule) on or after the 2013 budget
8
time.
9
(2)
Subitem (3) applies if the arrangement commenced before the start of
10
the day on which the Bill that became this Act was introduced into the
11
House of Representatives.
12
(3)
Despite subitem (1), section 716-440 of the Income Tax Assessment Act
13
1997 (as inserted by this Part) applies as if:
14
(a) the words "the sum of" and "and its
*
associates" in
15
paragraph (1)(f) of that section were omitted; and
16
(b) the words "the sum of" and "and its associates" in
17
paragraph (1)(g) of that section were omitted; and
18
(c) subsection (2) of that section were repealed.
19
(4)
In this item:
20
2013 budget time means 7.30 pm, by legal time in the Australian
21
Capital Territory, on 14 May 2013.
22
Consolidation Schedule 1
TOFA Part 6
No. , 2018
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
17
Part 6--TOFA
1
Income Tax Assessment Act 1997
2
22 Section 715-375 (heading)
3
Repeal the heading, substitute:
4
715-375 Cost setting on joining--amount of liability that is
5
Division 230 financial arrangement
6
23 Section 715-378 (heading)
7
Repeal the heading, substitute:
8
715-378 Cost setting on joining--head company's right to receive or
9
obligation to provide payment
10
24 After section 715-378
11
Insert:
12
715-379 Cost setting on leaving--amount of intragroup liability that
13
is Division 230 financial arrangement
14
(1) Subsection (2) applies if:
15
(a) an entity (the leaving entity) ceases to be a
*
subsidiary
16
member of a
*
consolidated group at a time (the leaving time);
17
and
18
(b) a thing (the accounting liability) is, in accordance with
19
*
accounting standards, or statements of accounting concepts
20
made by the Australian Accounting Standards Board:
21
(i) a liability of the leaving entity at the leaving time that
22
can or must be recognised in the entity's statement of
23
financial position; or
24
(ii) a liability of the
*
head company of the group at the
25
leaving time that can or must be recognised in the head
26
company's statement of financial position; and
27
Schedule 1 Consolidation
Part 6 TOFA
18
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
No. , 2018
(c) because subsection 701-1(1) (the single entity rule) ceases to
1
apply to the leaving entity at the leaving time:
2
(i) if subparagraph (b)(i) applies--the accounting liability
3
becomes a liability of the leaving entity, and an asset
4
(the corresponding asset) that consists of the liability
5
becomes an asset of the head company; or
6
(ii) if subparagraph (b)(ii) applies--the accounting liability
7
becomes a liability of the head company, and an asset
8
(the corresponding asset) that consists of the liability
9
becomes an asset of the leaving entity; and
10
(d) the corresponding asset's
*
tax cost is set at the leaving time
11
under:
12
(i) if subparagraph (b)(i) applies--section 701-20; or
13
(ii) if subparagraph (b)(ii) applies--section 701-45; and
14
(e) the accounting liability is or is part of a
*
Division 230
15
financial arrangement.
16
(2) For the purposes of Division 230 of this Act and Schedule 1 to the
17
Tax Laws Amendment (Taxation of Financial Arrangements) Act
18
2009:
19
(a) if subparagraph (1)(b)(i) applies--treat the leaving entity as
20
starting to have the accounting liability at the leaving time for
21
receiving a payment equal to the
*
tax cost setting amount of
22
the corresponding asset; or
23
(b) if subparagraph (1)(b)(ii) applies--treat the
*
head company
24
as starting to have the accounting liability at the leaving time
25
for receiving a payment equal to the tax cost setting amount
26
of the corresponding asset.
27
Note:
The tax cost setting amount of the corresponding asset is determined
28
under sections 701-60 and 701-60A.
29
715-379A Cost setting on leaving--head company's or leaving
30
entity's right to receive or obligation to provide payment
31
(1) This section applies in relation to an asset or a liability if:
32
(a) an entity (the leaving entity) ceases to be a
*
subsidiary
33
member of a
*
consolidated group at a time (the leaving time);
34
and
35
Consolidation Schedule 1
TOFA Part 6
No. , 2018
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
19
(b) because subsection 701-1(1) (the single entity rule) ceases to
1
apply to the leaving entity at the leaving time, the asset or
2
liability becomes the asset or liability of:
3
(i) the leaving entity; or
4
(ii) the
*
head company of the group; and
5
(c) if subparagraph (b)(i) applies:
6
(i) in the case of an asset--subsection 701-55(5A) applies
7
in relation to the asset at the leaving time because of
8
section 701-45; or
9
(ii) in the case of a liability--subsection 715-379(2) applies
10
in relation to the liability at the leaving time; and
11
(d) if subparagraph (b)(ii) applies:
12
(i) in the case of an asset--subsection 701-55(5A) applies
13
in relation to the asset at the leaving time because of
14
section 701-20; and
15
(ii) in the case of a liability--subsection 715-379(2) applies
16
in relation to the liability at the leaving time; and
17
(e) the asset or liability is or is part of a
*
Division 230 financial
18
arrangement.
19
(2) If subparagraph (1)(b)(i) applies:
20
(a) in the case of an asset--for the purposes of section 230-60,
21
assume that the leaving entity acquired the asset (as
22
mentioned in subsection 701-55(5A)) at the leaving time in
23
return for the leaving entity starting to have an obligation to
24
provide the payment mentioned in that subsection; and
25
(b) in the case of a liability--for the purposes of section 230-60,
26
assume that the leaving entity started to have the liability at
27
the leaving time in return for the leaving entity starting to
28
have a right to receive the payment mentioned in
29
subsection 715-379(2).
30
(3) If subparagraph (1)(b)(ii) applies:
31
(a) in the case of an asset--for the purposes of section 230-60,
32
assume that the head company acquired the asset (as
33
mentioned in subsection 701-55(5A)) at the leaving time in
34
return for the head company starting to have an obligation to
35
provide the payment mentioned in that subsection; and
36
Schedule 1 Consolidation
Part 6 TOFA
20
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
No. , 2018
(b) in the case of a liability--for the purposes of section 230-60,
1
assume that the head company started to have the liability at
2
the leaving time in return for the head company starting to
3
have a right to receive the payment mentioned in
4
subsection 715-379(2).
5
25 Application
6
(1)
The amendments made by this Part apply in the same way as Part 2 of
7
Schedule 1 to the Tax Laws Amendment (Taxation of Financial
8
Arrangements) Act 2009 applies.
9
Note:
The application of the amendments made by Part 2 of Schedule 1 to the Tax Laws
10
Amendment (Taxation of Financial Arrangements) Act 2009 is set out in Part 3 of that
11
Schedule.
12
(2)
The Commissioner cannot amend an assessment of an entity for an
13
income year in a particular way if:
14
(a) the entity lodged its income tax return for the income year
15
before the 2013 budget time; and
16
(b) the Commissioner could not amend the assessment in that
17
way if the amendments made by this Part and Part 7 were
18
disregarded; and
19
(c) the entity has not requested the Commissioner to amend the
20
assessment in that way.
21
(3)
In this item:
22
2013 budget time means 7.30 pm, by legal time in the Australian
23
Capital Territory, on 14 May 2013.
24
Consolidation Schedule 1
Value shifting Part 7
No. , 2018
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
21
Part 7--Value shifting
1
Income Tax Assessment Act 1997
2
26 Section 701-60 (table item 3)
3
Repeal the item, substitute:
4
3
section 701-20 (Cost to head
company of assets consisting of
certain liabilities owed by entity that
leaves group)
the
*
market value of the asset
3A
section 701-45 (Cost of assets
consisting of liabilities owed to
entity by members of the group)
the amount worked out in
accordance with section 701-60A
27 After section 701-60
5
Insert:
6
701-60A Tax cost setting amount for asset emerging when entity
7
leaves group
8
(1) This section applies for the purpose of working out the
*
tax cost
9
setting amount of an asset if:
10
(a) an entity (the leaving entity) ceases to be a
*
subsidiary
11
member of a
*
consolidated group (the old group) at a time
12
(the leaving time); and
13
(b) the asset's tax cost is set under section 701-45 because it
14
consists of a liability (the corresponding liability) owed to
15
the leaving entity.
16
(2) The
*
tax cost setting amount is:
17
(a) unless subsection (3) or (4) applies--the
*
market value of the
18
asset at the leaving time; or
19
(b) if subsection (3) applies--nil; or
20
(c) if subsection (4) applies--the least of the following amounts:
21
(i) the tax cost setting amount mentioned in
22
paragraph (4)(c);
23
Schedule 1 Consolidation
Part 7 Value shifting
22
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
No. , 2018
(ii) if the
*
head company of the old group was entitled to a
1
deduction in respect of the asset for an income year
2
ending on or before the leaving time--the tax cost
3
setting amount mentioned in paragraph (4)(c) reduced
4
by the amount of the deduction;
5
(iii) the market value of the asset at the leaving time.
6
(3) This subsection applies if:
7
(a) the corresponding liability is not a debt; and
8
(b) either:
9
(i) at the time the corresponding liability arose, the entity to
10
whom the corresponding liability was owed and the
11
entity owing the corresponding liability were both
12
*
members of the old group; or
13
(ii) if subparagraph (i) does not apply--after the time the
14
corresponding liability arose, a member of the old group
15
*
acquired the asset or started to have the corresponding
16
liability.
17
(4) This subsection applies if:
18
(a) the corresponding liability is not a debt; and
19
(b) at the time the corresponding liability arose, the entity to
20
whom the corresponding liability was owed and the entity
21
owing the corresponding liability were not both members of
22
the old group; and
23
(c) the
*
tax cost of the asset was set under section 701-10 at the
24
time an entity became a
*
subsidiary member of the old group,
25
at the asset's
*
tax cost setting amount (whether or not
26
section 701-58 applied in relation to the setting of that tax
27
cost).
28
28 Section 711-40
29
Repeal the section, substitute:
30
711-40 Liabilities owed to the leaving entity by members of the old
31
group--step 3 in working out allocable cost amount
32
For the purposes of step 3 in the table in subsection 711-20(1), the
33
step 3 amount is the total, for all liabilities owed by
*
members of
34
Consolidation Schedule 1
Value shifting Part 7
No. , 2018
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
23
the old group to the leaving entity at the leaving time, of the
*
tax
1
cost setting amounts of the corresponding assets of the leaving
2
entity.
3
Note:
The tax cost of a corresponding asset of the leaving entity is set under
4
section 701-45. The tax cost setting amount of the corresponding asset
5
is determined under section 701-60A.
6
29 Subsection 711-45(4)
7
Omit "
*
market value", substitute "
*
tax cost setting amount".
8
30 Application
9
(1)
The amendments made by this Part apply in relation to an entity that
10
ceases to be a subsidiary member of a consolidated group or MEC
11
group under an arrangement that commences on or after the 2013
12
budget time.
13
(2)
If an asset mentioned in subsection 701-60A(1) of the Income Tax
14
Assessment Act 1997 (as inserted by this Schedule) is or is part of a
15
Division 230 financial arrangement at the leaving time mentioned in
16
that subsection, the amendments made by this Part also apply in relation
17
to that asset in the same way as Part 2 of Schedule 1 to the Tax Laws
18
Amendment (Taxation of Financial Arrangements) Act 2009 applies.
19
Note:
The application of the amendments made by Part 2 of Schedule 1 to the Tax Laws
20
Amendment (Taxation of Financial Arrangements) Act 2009 is set out in Part 3 of that
21
Schedule.
22
(3)
Subitem (4) applies if:
23
(a) an entity ceases to be a subsidiary member of a consolidated
24
group or MEC group under an arrangement that commences
25
before the 2013 budget time; and
26
(b) the amendments made by this Part apply because of
27
subitem (2).
28
(4)
The Commissioner cannot amend an assessment of an entity for an
29
income year in a particular way if:
30
(a) the entity lodged its income tax return for the income year
31
before the 2013 budget time; and
32
(b) the Commissioner could not amend the assessment in that
33
way if the amendments made by Part 6 and this Part were
34
disregarded; and
35
Schedule 1 Consolidation
Part 7 Value shifting
24
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
No. , 2018
(c) the entity has not requested the Commissioner to amend the
1
assessment in that way.
2
Note:
Subitems (2), (3) and (4) have the effect that the amendments made by this Part operate
3
in relation to an asset that is or is part of a Division 230 financial arrangement in the
4
same way that the amendments made by Part 6 of this Schedule operate.
5
(5)
In this item:
6
2013 budget time means 7.30 pm, by legal time in the Australian
7
Capital Territory, on 14 May 2013.
8
Consolidation Schedule 1
Commencement of arrangements Part 8
No. , 2018
Treasury Laws Amendment (Income Tax Consolidation Integrity) Bill
2018
25
Part 8--Commencement of arrangements
1
31 Commencement of arrangements
2
(1)
Subitems (2), (3) and (4) specify, for the purpose of this Schedule, the
3
time of commencement of an arrangement under which:
4
(a) an entity becomes a subsidiary member of a consolidated
5
group or MEC group; or
6
(b) an entity that ceases to be a subsidiary member of a
7
consolidated group or MEC group.
8
(2)
If the arrangement is or relates to a takeover bid (within the meaning of
9
the Corporations Act 2001) the time is when:
10
(a) for an off-market bid (within the meaning of that Act)--step
11
4 of the table in subsection 633(1) of that Act is completed;
12
or
13
(b) for a market bid (within the meaning of that Act)--step 2 of
14
the table in subsection 635(1) of that Act is completed.
15
(3)
If a court orders, under subsection 411(1) of the Corporations Act 2001:
16
(a) a meeting or meetings of a company's members about the
17
arrangement; or
18
(b) a meeting or meetings of one or more classes of a company's
19
members about the arrangement;
20
the time is when the application for the order was made.
21
(4)
If subitem (2) or (3) does not apply, the time is when the decision to
22
enter into the arrangement was made.
23