Taxation Determination TD 2007/15
Date of effect: 9 May 2007





Appendix: 3. Section 703-15 of the ITAA 1997 states that an entity is a member of a consolidated group while the entity is the head company of the group or a subsidiary member of the group. Taxation Determination TD 2006/581 explains that a subsidiary company cannot meet the membership requirements in section 703-15 from the time of deregistration because the company ceases to exist at that time. For the same reason, a head company will also be unable to meet membership requirements from the time of deregistration. 4. Section 601AH of the Corporations Act provides for reinstatement of the registration of a company in certain circumstances. Subsection 601AH(5) of the Corporations Act explains the effect of reinstatement: 5. As subsection 601AH(5) of the Corporations Act deems a continuing existence in the period from deregistration to reinstatement, the effect of reinstatement for a subsidiary member is that it is not regarded as having ceased to be a subsidiary member at deregistration. Similarly, the effect of reinstatement for a head company is that the consolidated group is not regarded as having ceased to exist at deregistration. In the case of a subsidiary member, any transactions entered into in the period of deregistration that are validated in accordance with the reinstatement would be taken, for the purposes described in section 701-1 of the ITAA 1997, to have been entered into by the head company. Previously released in draft form as TD 2006/D39


Ruling: 1. Yes. Subsection 601AH(5) of the Corporations Act 2001 (the Corporations Act) provides that a reinstated company is taken to have continued in existence as if it had not been deregistered. Accordingly, if deregistration caused a member of a consolidated group to fail to meet the membership requirements in section 703-15 of the Income Tax Assessment Act 1997 (ITAA 1997) the effect of a subsequent reinstatement is that the member would be treated as if it had not ceased to satisfy those membership requirements at the time of deregistration. | Date of effect: 2. This Determination applies both before and after its date of issue. However, the Determination will not apply to taxpayers to the extent that it conflicts with the terms of settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10). | Commissioner of Taxation 9 May 2007 | If a company is reinstated, the company is taken to have continued in existence as if it had not been deregistered. A person who was a director of the company immediately before deregistration becomes a director again as from the time when ASIC or the Court reinstates the company. Any property of the company that is still vested in ASIC revests in the company. If the company held particular property subject to a security or other interest or claim, the company takes the property subject to that interest or claim.


Related rulings: TR 2006/10 TD 2006/58
Legislative references: ITAA 1997 701-1 ITAA 1997 703-15 ITAA 1997 Div 711 Corporations Act 2001 601AH Corporations Act 2001 601AH(5) TAA 1953
Subject references: company consolidated group consolidation companies consolidation membership consolidation tax liabilities member of a group ownership, interests, control & rights subsidiary company subsidiary member of a consolidated group wholly owned wholly owned subsidiary