The objects of this Part are:
(a) to prevent double taxation of the same economic gain realised by a consolidated group; and
(b) to prevent a double tax benefit being obtained from an economic loss realised by a consolidated group; and
(c) to provide a systematic solution to the prevention of such double taxation and double tax benefits that will:
(i) reduce the cost of complying with this Act; and
(ii) improve business efficiency by removing complexities and promoting simplicity in the taxation of wholly - owned groups.
You can choose for transactions under a scheme to restructure a company's or unit trust's business to be tax neutral if, under the scheme:
(a) you cease to own shares in the company or units in the trust; and
(b) in exchange, you become the owner of new shares in another company.
This Part allows certain groups of entities to be treated as single entities for income tax purposes.
Following a choice to consolidate, subsidiary members are treated as part of the head company of the group rather than as separate income tax identities. The head company inherits their income tax history when they become subsidiary members of the group. On ceasing to be subsidiary members, they take with them an income tax history that recognises that they are different from when they became subsidiary members.
This is supported by rules that:
(a) set the cost for income tax purposes of assets that subsidiary members bring into the group; and
(b) determine the income tax history that is taken into account when entities become, or cease to be, subsidiary members of the group; and
(c) deal with the transfer of tax attributes such as losses and franking credits to the head company when entities become subsidiary members of the group.
Head company rules
701 - 10 Cost to head company of assets of joining entity
701 - 15 Cost to head company of membership interests in entity that leaves group
701 - 20 Cost to head company of assets consisting of certain liabilities owed by entity that leaves group
701 - 25 Tax - neutral consequence for head company of ceasing to hold assets when entity leaves group
701 - 30 Where entity not subsidiary member for whole of income year
701 - 35 Tax - neutral consequence for entity of ceasing to hold assets when it joins group
701 - 45 Cost of assets consisting of liabilities owed to entity by members of the group
701 - 50 Cost of certain membership interests of which entity becomes holder on leaving group
701 - 55 Setting the tax cost of an asset
701 - 56 Application of subsection 701 - 55(6)
701 - 58 Effect of setting the tax cost of an asset that the head company does not hold under the single entity rule
701 - 60 Tax cost setting amount
701 - 60A Tax cost setting amount for asset emerging when entity leaves group
701 - 61 Assets in relation to Division 230 financial arrangement--head company's assessable income or deduction
701 - 63 Right to future income and WIP amount asset
701 - 65 Net income and losses for trusts and partnerships
701 - 67 Assets in this Part are CGT assets, etc.
701 - 70 Adjustments to taxable income where identities of parties to arrangement merge on joining group
701 - 75 Adjustments to taxable income where identities of parties to arrangement re - emerge on leaving group
701 - 80 Accelerated depreciation
701 - 85 Other exceptions etc. to the rules