INCOME TAX ASSESSMENT ACT 1997 - SECT 709.165 Subsidiary member is former exempting entity

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INCOME TAX ASSESSMENT ACT 1997 - SECT 709.165

Subsidiary member is former exempting entity

(1) This section operates if:

(a) the * head company of a * consolidated group is neither an exempting entity nor a * former exempting entity; and

(b) a * corporate tax entity becomes a * subsidiary member of the group at a time (also the joining time ); and

(2) These rules apply to the * consolidated group.

Rules applying to * consolidated group
Item
Rule
1
The * head company becomes a * former exempting entity at the joining time
2
The * head company has both a * franking account and an * exempting account
3
If the * subsidiary member's * exempting account has an * exempting surplus at the joining time:
(a) a debit equal to that surplus arises in that account at the joining time; and
(b) a credit equal to that surplus arises in the exempting account of the * head company at the joining time
4
If the * subsidiary member's * exempting account has an * exempting deficit at the joining time:
(a) a credit equal to that deficit arises in that account at the joining time; and
(b) a debit equal to that deficit arises in the subsidiary's * franking account just before the joining time
5
The * subsidiary member's * exempting account does not operate during the period:
(a) starting just after the joining time; and
(b) ending when the entity ceases to be a subsidiary member of the group
6
Item 1 of the table in section 208 - 115 does not apply to the * head company
7
Item 1 of the table in section 208 - 120 does not apply to the * head company
8
Item 1 of the table in section 208 - 130 does not apply to the * head company
9
Item 1 of the table in section 208 - 145 does not apply to the * head company

Rules applying to * consolidated group
1	The * head company becomes a * former exempting entity at the joining time
2	The * head company has both a * franking account and an * exempting account
3	If the * subsidiary member's * exempting account has an * exempting surplus at the joining time: (a) a debit equal to that surplus arises in that account at the joining time; and (b) a credit equal to that surplus arises in the exempting account of the * head company at the joining time
4	If the * subsidiary member's * exempting account has an * exempting deficit at the joining time: (a) a credit equal to that deficit arises in that account at the joining time; and (b) a debit equal to that deficit arises in the subsidiary's * franking account just before the joining time
5	The * subsidiary member's * exempting account does not operate during the period: (a) starting just after the joining time; and (b) ending when the entity ceases to be a subsidiary member of the group
6	Item 1 of the table in section 208 - 115 does not apply to the * head company
7	Item 1 of the table in section 208 - 120 does not apply to the * head company
8	Item 1 of the table in section 208 - 130 does not apply to the * head company
9	Item 1 of the table in section 208 - 145 does not apply to the * head company

Note 1: Any surplus in the subsidiary's franking account will be transferred to the head company's franking account: see subsection 709 - 60(2).

Note 2: If the subsidiary's franking account is in deficit, it will be liable for franking deficit tax: see subsection 709 - 60(3). This deficit may be increased by item 4 in the table in subsection (2).

Note 3: The subsidiary's franking account does not operate while it is a member of the group: see section 709 - 65.

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Rules applying to * consolidated group
Item	Rule
1	The * head company becomes a * former exempting entity at the joining time
2	The * head company has both a * franking account and an * exempting account
3	If the * subsidiary member's * exempting account has an * exempting surplus at the joining time: (a) a debit equal to that surplus arises in that account at the joining time; and (b) a credit equal to that surplus arises in the exempting account of the * head company at the joining time
4	If the * subsidiary member's * exempting account has an * exempting deficit at the joining time: (a) a credit equal to that deficit arises in that account at the joining time; and (b) a debit equal to that deficit arises in the subsidiary's * franking account just before the joining time
5	The * subsidiary member's * exempting account does not operate during the period: (a) starting just after the joining time; and (b) ending when the entity ceases to be a subsidiary member of the group
6	Item 1 of the table in section 208 - 115 does not apply to the * head company
7	Item 1 of the table in section 208 - 120 does not apply to the * head company
8	Item 1 of the table in section 208 - 130 does not apply to the * head company
9	Item 1 of the table in section 208 - 145 does not apply to the * head company