ATO ID 2004/356: Consolidation - choice to consolidate - choice does not have effect
Date of decision: 18 December 2003
Year of income: Year ended 30 June 2003
Business line: Consolidation Centre of Expertise

Issue
Can the date specified in a choice to form a consolidated group under section 703-50 of the Income Tax Assessment Act 1997 (ITAA 1997) be changed, if the group was ineligible to consolidate from the original date notified to the Commissioner?

Decision
No, the original choice to form a consolidated group would be ineffective.

Facts
A company provided the Commissioner with its choice to form a consolidated group with effect from 1 July 2002. It has since been discovered that the group was in fact ineligible to consolidate from the date originally specified in the notice. The head company wishes to change the date of effect to a later date.

Reasons for decision
Summary: Subsection 703-50(1) of the ITAA 1997 sets out the conditions for making a choice to consolidate: Where any of the conditions in subsection 703-50(1) of the ITAA 1997 are not satisfied, the choice made by the company will be ineffective. Where a choice to consolidate has been made in accordance with subsection 703-50(1) of the ITAA 1997 but the Commissioner is satisfied that the choice contains information that is incorrect in a material particular, the combined effect of subsections 703-50(5) and (6) of the ITAA 1997 is that the choice has no effect unless the Commissioner gives the company written notice that the choice is effective. However, the Commissioner is not able to give effect under subsection 703-50(6) to a notice which does not satisfy the conditions of subsection 703-50(1) of the ITAA 1997. In nominating 1 July 2002 as the date of effect, the requirements in subsection 703-50 (1) of the ITAA 1997 were not satisfied because there was no consolidatable group at that time.

Legislative references: Income Tax Assessment Act 1997 section 703-50 subsection 703-50(1) subsection 703-50(3) subsection 703-50(5) subsection 703-50(6)
Related ATO interpretative decisions: ATO ID 2004/354
Subject references: Consolidation Consolidation - formation Formation time Head Company