Income Tax Assessment Act 1997

s 719-76 — Notice of choice to consolidate

(1) This section applies if: (a) a * MEC group comes into existence on the day specified in a choice under section 719 ‑ 50; and (b) subsection 719 ‑ 75(1), (2) or (3) would apply to the MEC group in relation to the * income year of a company in which the specified day occurred; and (c) in a case where subsection 719 ‑ 75(1) or (2) applies—the company will be the * head company of the group as at the end of the income year; and (d) in a case where subsection 719 ‑ 75(3) applies—the company will be the head company of the group immediately before the group ceased to exist. (2) The company must give the Commissioner a notice in the * approved form containing the following information: (a) the identity of the company; (b) the day specified in the choice on which the * MEC group comes into existence; (c) the identity of each * eligible tier ‑ 1 company of the * top company in relation to the MEC group on that day; (d) the identity of each * subsidiary member of the group on that day; (e) the identity of each entity that was a subsidiary member of the group on that day but was not such a subsidiary member when the notice is given; (f) the identity of each entity that was not a subsidiary member of the group on that day but was such a subsidiary member when the notice is given; (g) the identity of each entity that became a subsidiary member of the group after that day but was not such a subsidiary member when the notice is given. (3) The notice must be given no later than: (a) if the company is required to give the Commissioner its * income tax return for the income year during which that day occurs—the day on which the company gives the Commissioner that income tax return; or (b) otherwise—the last day in the period within which the company would be required to give the Commissioner such a return if it were required to give the Commissioner such a return.

Amendment history: Inserted by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B)

s 719-77 — Notice in relation to new eligible tier ‑ 1 members etc.

(1) This section applies if: (a) a * MEC group consists of the members of a * potential MEC group derived from one or more * eligible tier ‑ 1 companies of a * top company; and (b) one or more other companies become eligible tier ‑ 1 companies of the top company at a time because of a choice under subsection 719 ‑ 5(4). (2) The * head company of the * MEC group must give the Commissioner a notice in the * approved form containing the following information: (a) the identity of the head company; (b) the time mentioned in paragraph (1)(b); (c) the identity of each entity that became an * eligible tier ‑ 1 company of the * top company in relation to the MEC group at that time because of the choice; (d) the identity of each entity that became a * subsidiary member of the group at that time because of the choice; (e) the identity of each entity that was a subsidiary member of the group at that time but was not such a subsidiary member when the notice is given. (3) The notice must be given no later than: (a) if the * head company is required to give the Commissioner its * income tax return for the income year during which that time occurs—the day on which the head company gives the Commissioner that income tax return; or (b) otherwise—the last day in the period within which the head company would be required to give the Commissioner such a return if it were required to give the Commissioner such a return.

Amendment history: Inserted by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B)

s 719-78 — Notice of special conversion event

(1) This section applies if a * MEC group comes into existence at the time because of a choice under paragraph 719 ‑ 40(e). (2) The company mentioned in paragraph 719 ‑ 40(b) must give the Commissioner a notice in the * approved form containing the following information: (a) the identity of the company; (b) the time at which the * MEC group comes into existence; (c) the identity of each * eligible tier ‑ 1 company of the * top company in relation to the MEC group on that day; (d) the identity of each * subsidiary member of the group at that time; (e) the identity of each entity that was a subsidiary member of the group at that time but was not such a subsidiary member when the notice is given; (f) the identity of each entity that was not a subsidiary member of the group at that time but was such a subsidiary member when the notice is given; (g) the identity of each entity that became a subsidiary member of the group after that time but was not such a subsidiary member when the notice is given. (3) The notice must be given no later than: (a) if the company is required to give the Commissioner its * income tax return for the income year during which that time occurs—the day on which the company gives the Commissioner that income tax return; or (b) otherwise—the last day in the period within which the company would be required to give the Commissioner such a return if it were required to give the Commissioner such a return.

Amendment history: Inserted by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B)

s 719-79 — Notice of appointment of provisional head company after formation of group

(1) This section applies if an entity is appointed to be the * provisional head company of a * MEC group because of a choice under subsection 719 ‑ 60(3). (2) The * provisional head company must give the Commissioner a notice in the * approved form containing the following information: (a) the identity of the provisional head company; (b) the day on which the choice was made; (c) the day on which the * cessation event mentioned in subsection 719 ‑ 60(3) occurs. (3) The notice must be given no later than: (a) if: (i) the group came into existence because of a choice under section 719 ‑ 50; and (ii) the event happens more than 28 days before a notice under section 719 ‑ 76 in relation to the choice is given; the day on which the notice mentioned in subparagraph (ii) is given; or (b) in any other case—28 days after the * cessation event.

Amendment history: Inserted by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B)

s 719-80 — Notice of events affecting MEC group

(1) If an event (the notifiable event ) described in column 2 of an item of the table happens in relation to a * MEC group, the entity described in column 3 of the item must give the Commissioner notice in the * approved form of the notifiable event. Notice of events Column 1 Item Column 2 If this event happens: Column 3 Notice must be given by: 1. An entity becomes a member of a * MEC group The * provisional head company of the group 2. An entity ceases to be a member of a MEC group The provisional head company of the group 3. A * cessation event happens to the * provisional head company of a MEC group The company, or the person (if any) who was its public officer just before it ceased to exist if the company ceased to be the provisional head company because it ceases to exist (2) The entity described in column 3 of the relevant item must give notice of the notifiable event: (a) if: (i) the group came into existence because of a choice under section 719 ‑ 50; and (ii) the notifiable event happens before the relevant notice is given to the Commissioner under section 719 ‑ 76 (notice of choice to consolidate); no later than the day mentioned in subsection (3); or (b) if: (i) the group results from a * special conversion event; and (ii) a choice under section 703 ‑ 50 is made in relation to the * consolidated group mentioned in paragraph 719 ‑ 40(1)(b); and (iii) the notifiable event happens before the relevant notice is given to the Commissioner under section 703 ‑ 58 (notice of choice to consolidate); no later than the day mentioned in subsection (3); or (c) in any other case—within 28 days after the notifiable event. (3) The day is: (a) if the entity is required to give the Commissioner its * income tax return for the income year during which the notifiable event happens—the day on which the company gives the Commissioner that income tax return; or (b) otherwise—the last day in the period within which the entity would be required to give the Commissioner such a return if it were required to give the Commissioner such a return.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B)

s 719-85 — Application

Sections 719 ‑ 90 to 719 ‑ 95 set out the effects if: (a) a company (the old head company ) is the * head company of a * MEC group at the end of an income year; and (b) a different company (the new head company ) is the head company of the group at the start of the next income year (the transition time ). Note: This case can arise from the operation of section 719 ‑ 75, which treats an entity that is the provisional head company of the group at a certain time in the income year as being the group’s head company at all times in the income year when the group is in existence. The old head company is also taken to become a subsidiary member of the group at the transition time, and the new head company is taken to cease being a subsidiary member at that time. Section 719 ‑ 95 ensures that these results do not change the tax position of the group.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11)

s 719-90 — New head company treated as substituted for old head company at all times before the transition time

(1) Everything that happened in relation to the old head company before the transition time is taken to have happened in relation to the new head company instead, just as if the new head company had been the old head company at all times before the transition time. Note: This section treats the new head company as having in effect assumed the identity of the old head company throughout the period before the transition time, but without affecting any of the other attributes of the old head company. (2) To avoid doubt, subsection (1) also covers everything that, immediately before the transition time, was taken, because of: (a) section 701 ‑ 1 (Single entity rule); or (b) section 701 ‑ 5 (Entry history rule); or (c) section 703 ‑ 75 (about the effects of choice to continue consolidated group after shelf company becomes new head company); or (ca) section 719 ‑ 125 (about the effects of a group conversion involving a MEC group); or (d) one or more previous applications of this section; to have happened in relation to the old head company. (3) Subsections (1) and (2) have effect: (a) for the head company core purposes in relation to an income year ending after the transition time; and (b) for the entity core purposes in relation to an income year ending after the transition time. (4) Subsections (1) and (2) have effect subject to: (a) section 701 ‑ 40 (Exit history rule); and (b) a provision of this Act to which section 701 ‑ 40 is subject because of section 701 ‑ 85 (about exceptions to the core rules in Division 701). Note: An example of provisions covered by paragraph (b) of this subsection is section 707 ‑ 410, which ensures that section 701 ‑ 40 (Exit history rule) does not result in a leaving entity inheriting a loss of any sort.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B)

s 719-95 — No consequences of old head company becoming, and new head company ceasing to be, subsidiary member of the group

(1) A provision of this Part that applies on an entity becoming a * subsidiary member of a * MEC group does not apply to an entity being taken to have become such a member because the entity stopped being the * head company of the group as mentioned in section 719 ‑ 85, unless the provision is expressed to apply despite this subsection. Note: An example of the effect of this subsection is that section 701 ‑ 5 (Entry history rule) does not apply. See instead section 719 ‑ 90. (2) To avoid doubt, subsection (1) does not affect the application of subsection 701 ‑ 1(1) (the single entity rule). (3) A provision of this Part that applies on an entity ceasing to be a * subsidiary member of a * MEC group does not apply to an entity being taken to cease being such a member because the entity became the * head company of the group as mentioned in section 719 ‑ 85, unless the provision is expressed to apply despite this subsection. Note: An example of the effect of this subsection is that section 701 ‑ 40 (Exit history rule) does not apply. See instead section 719 ‑ 90.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11)

s 719-120 — Application

(1) This Subdivision applies if, at a particular time (the conversion time ): (a) a * consolidated group (the new group ) is * created from a * MEC group (the old group ); or (b) a MEC group (the new group ) is created from a consolidated group (the old group ). (2) However, sections 719 ‑ 130 and 719 ‑ 135 apply only in relation to entities that: (a) were * members of the old group just before the conversion time; and (b) are members of the new group at that time.

Amendment history: Inserted by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B)

s 719-125 — Head company of new group retains history of head company of old group

(1) Everything that happened in relation to the * head company of the old group before the conversion time is taken instead to have happened in relation to: (a) if the head company of the old group is the same entity as the head company of the new group—that entity in its role as head company of the new group; or (b) otherwise—the head company of the new group (just as if the head company of the new group had been the head company of the old group at all times before the conversion time). (2) To avoid doubt, subsection (1) also covers everything that, immediately before the conversion time, was taken to have happened in relation to the * head company of the old group because of: (a) section 701 ‑ 1 (the single entity rule); or (b) section 701 ‑ 5 (the entry history rule); or (c) section 703 ‑ 75 (about the effects of choice to continue * consolidated group after shelf company becomes new head company); or (d) section 719 ‑ 90 (about the effects of a change of head company of a * MEC group); or (e) one or more previous applications of this Division. (3) Subsections (1) and (2) have effect: (a) for the * head company core purposes in relation to an income year ending after the conversion time; and (b) for the entity core purposes in relation to an income year ending after the conversion time; and (c) for the purposes of determining the balance of the * franking account of the head company of the new group at and after the conversion time. (4) Subsections (1) and (2) have effect subject to: (a) section 701 ‑ 40 (Exit history rule); and (b) a provision of this Act to which section 701 ‑ 40 is subject because of section 701 ‑ 85 (about exceptions to the core rules in Division 701). Note: An example of provisions covered by paragraph (b) of this subsection is Subdivision 717 ‑ E (about transferring to a company leaving a consolidated group various surpluses under the CFC rules in Part X of the Income Tax Assessment Act 1936 ).

Amendment history: Inserted by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B)

s 719-130 — Provisions of this Part not to apply to conversion

(1) A provision mentioned in subsection (5) that applies on an entity becoming a * member of a * consolidated group or * MEC group does not apply to an entity becoming such a member because of a situation described in subsection 719 ‑ 120(1), unless the provision is expressed to apply despite this subsection. Note 1: An example of the effect of this subsection is that section 701 ‑ 5 (entry history rule) does not apply. See instead section 719 ‑ 125. Note 2: Further examples of the effect of this subsection are that Division 705 (cost setting on entry) and Division 707 (losses) do not apply. (2) Subsection (1) does not affect the application of subsection 701 ‑ 1(1) (the single entity rule). (3) A provision mentioned in subsection (5) that applies on an entity ceasing to be a * member of a * consolidated group or * MEC group does not apply to an entity ceasing being such a member because of a situation described in subsection 719 ‑ 120(1), unless the provision is expressed to apply despite this subsection. Note 1: An example of the effect of this subsection is that section 701 ‑ 40 (Exit history rule) does not apply. See instead section 719 ‑ 125. Note 2: Another example of the effect of this subsection is that Division 711 (cost setting on exit) does not apply. (4) Subsection (3) does not apply if: (a) the old group mentioned in subsection 719 ‑ 120(1) is a * consolidated group; and (b) the new group mentioned in subsection 719 ‑ 120(1) is a * MEC group; and (c) the entity ceasing to be a * member of the old group becomes an * eligible tier ‑ 1 company in respect of the new group. (5) The provisions are as follows: (a) Subdivision 104 ‑ L; (b) section 165 ‑ 212E; (c) this Part (other than this Subdivision); (d) Part 3 ‑ 90 of the Income Tax (Transitional Provisions) Act 1997 .

Amendment history: Inserted by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B)

s 719-135 — Provisions of this Part applying to conversion despite section 719 ‑ 130

(1) This section applies despite subsections 719 ‑ 130(1) and (3). (2) If the new group is a * consolidated group, the following provisions may apply on an entity ceasing to be a * member of the old group: (a) Subdivision 719 ‑ K; (b) any other provision of this Part, to the extent that the application of the provision is necessary for the application of Subdivision 719 ‑ K.

Amendment history: Inserted by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B)

s 719-140 — Other provisions of this Part not applying to conversion

If the new group is a * consolidated group, the following provisions do not apply merely because the old group ceases to exist at the conversion time (or merely because the * potential MEC group of which the old group consisted ceases to exist at that time): (a) section 719 ‑ 280; (b) section 719 ‑ 465; (c) section 719 ‑ 705; (d) section 719 ‑ 725; (e) any other provision of this Part, to the extent that the application of the provision is necessary for the application of any of those sections.

Amendment history: Inserted by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B)

s 719-150 — What this Subdivision is about

When an entity (other than an eligible tier ‑ 1 company) becomes a subsidiary member of a MEC group, the tax cost of its assets is set at a tax cost setting amount that is worked out in accordance with Divisions 701 and 705 as modified by this Subdivision. Assets of eligible tier ‑ 1 companies becoming members of a MEC group do not have their tax cost set. Table of sections Application and object 719 ‑ 155 Object of this Subdivision Modified application of tax cost setting rules for joining 719 ‑ 160 Tax cost setting rules for joining have effect with modifications 719 ‑ 165 Trading stock value and registered emissions unit value not set for assets of eligible tier ‑ 1 companies 719 ‑ 170 Modified effect of subsections 705 ‑ 175(1) and 705 ‑ 185(1)

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11)

s 719-155 — Object of this Subdivision

The object of this Subdivision is to modify the tax cost setting rules in Divisions 701 and 705 so that they take account of the special characteristics of * MEC groups.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Repealed and substituted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 719-160 — Tax cost setting rules for joining have effect with modifications

(1A) This section applies if an entity (the MEC joining entity ) becomes a * subsidiary member of a * MEC group at a time (the MEC joining time ). (1) This section has effect for the head company core purposes set out in subsection 701 ‑ 1(2). General modifying rule (2) The provisions mentioned in subsection (3) operate, for the purposes of setting the * tax cost of an asset of the MEC joining entity, as if each * subsidiary member of the group (including the MEC joining entity) that is an * eligible tier ‑ 1 company at the MEC joining time were a part of the * head company of the group, rather than a separate entity. Note 1: This subsection means that references in those provisions to matters internal to the group operate as if eligible tier ‑ 1 companies in the group were parts of the head company of the group. For example: (a) provisions operating if the head company holds (whether directly or indirectly) membership interests in another entity operate even if an eligible tier ‑ 1 company actually holds those interests; and (b) provisions operating if the head company owns or controls another entity operate even if one or more eligible tier ‑ 1 companies actually own or control that other entity; and (c) provisions operating if an entity is interposed between the head company and another entity operate even if the first entity is actually interposed between an eligible tier ‑ 1 company and the other entity. Note 2: If the MEC joining entity is an eligible tier ‑ 1 company, this subsection means the assets of the entity do not have their tax cost reset at the MEC joining time. This is because Subdivision 705 ‑ A (and related provisions) reset the tax cost of assets of subsidiary members of a group, but not assets of the head company. (3) The provisions are: (a) section 701 ‑ 10 (about setting the tax cost of assets of an entity joining a group); and (b) Subdivision 705 ‑ A; and (c) any other provision of this Act giving Subdivision 705 ‑ A a modified effect in circumstances other than those covered by that Subdivision. Note: An example of provisions covered by paragraph (c) are the provisions of Subdivision 705 ‑ B giving Subdivision 705 ‑ A a modified effect when a consolidated group is formed.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23)

s 719-165 — Trading stock value and registered emissions unit value not set for assets of eligible tier ‑ 1 companies

(1) This section applies if an entity (the MEC joining entity ) becomes a * subsidiary member of a * MEC group at a time (the MEC joining time ). (2) Subsection 701 ‑ 35(4) (setting value of trading stock at tax ‑ neutral amount) does not apply to the assets of the MEC joining entity if it is an * eligible tier ‑ 1 company at the MEC joining time. (3) Subsection 701 ‑ 35(5) (setting value of registered emissions unit at tax ‑ neutral amount) does not apply to the assets of the MEC joining entity if it is an * eligible tier ‑ 1 company at the MEC joining time.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Repealed and substituted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1))

s 719-170 — Modified effect of subsections 705 ‑ 175(1) and 705 ‑ 185(1)

(1) This section applies if all of the * members of a * MEC group (the acquired group ) become members of another MEC group, or of a * consolidated group, at a particular time (the acquisition time ) as a result of the * acquisition of * membership interests in: (a) the * head company of the acquired group; and (b) other entities that were * eligible tier ‑ 1 companies of the acquired group just before the acquisition time. (2) Subsections 705 ‑ 175(1) and 705 ‑ 185(1) have effect as if a * membership interest in an entity mentioned in paragraph (1)(b) of this section were a membership interest in the * head company of the acquired group. Note 1: If the acquiring group is a MEC group, and the head company of the acquired group becomes an eligible tier ‑ 1 company of the acquiring group, the assets of the members of the acquired group do not have their tax cost reset at the acquisition time. This is because: (a) section 719 ‑ 160 treats an entity becoming an eligible tier ‑ 1 company of the acquiring group as if it were a part of the head company of that group; and (b) section 705 ‑ 185 treats the subsidiary members of the acquired group as part of the head company of the acquired group. Note 2: If: (a) the acquiring group is a MEC group, but the head company of the acquired group does not become an eligible tier ‑ 1 company of the acquiring group; or (b) the acquiring group is a consolidated group and the acquired group is a MEC group; the assets of the members of the acquired group have their tax cost reset at the acquisition time (section 719 ‑ 160 does not preclude tax cost resetting in these cases). For the purposes of resetting the tax cost of those assets, section 705 ‑ 185 treats the subsidiary members of the acquired group as part of the head company of the acquired group.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 719-250 — What this Subdivision is about

This Subdivision modifies the rules about transferring and utilising losses so the rules operate appropriately in relation to MEC groups, taking account of the special characteristics of those groups. The modifications mainly affect: (a) rules about maintaining the same ownership to be able to utilise a loss; and (b) rules for working out how much of a loss can be utilised by reference to bundles of losses and their available fractions. Table of sections Maintaining the same ownership to be able to utilise loss 719 ‑ 255 Special rules 719 ‑ 260 Special test for utilising a loss because a company maintains the same owners 719 ‑ 265 What is the test company? 719 ‑ 270 Assumptions about the test company having made the loss for an income year 719 ‑ 275 Assumptions about nothing happening to affect direct and indirect ownership of the test company 719 ‑ 280 Assumptions about the test company failing to meet the conditions in section 165 ‑ 12 Business continuity test and change of head company 719 ‑ 285 Business continuity test and change of head company Bundles of losses and their available fractions 719 ‑ 300 Application 719 ‑ 305 Subdivision 707 ‑ C affects utilisation of losses made by ongoing head company while it was head company 719 ‑ 310 Adjustment of available fractions for bundles of losses previously transferred to ongoing head company 719 ‑ 315 Further adjustment of available fractions for all bundles 719 ‑ 320 Limit on utilising losses other than the prior group losses 719 ‑ 325 Cancellation of all losses in a bundle

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 719-255 — Special rules

(1) This section and section 719 ‑ 260 have effect for the purposes of working out whether a loss can be * utilised for an income year (the claim year ) by a company (the focal company ) that made the loss if: (a) section 165 ‑ 12 is relevant to the question whether the focal company can utilise the loss; and (b) the focal company is the * head company of a * MEC group at any time in its * ownership test period for the loss (as affected by section 707 ‑ 205, if relevant). Note: If the focal company made the loss because of a transfer under Subdivision 707 ‑ A, section 707 ‑ 205 has the effect that the ownership test period starts for the focal company at the time of the transfer. Section 707 ‑ 210 does not have effect (2) Section 707 ‑ 210 does not have effect for the purposes of working out whether the focal company can * utilise the loss for the claim year. Note: Section 707 ‑ 210 is about whether a company can utilise a loss it made because the loss was transferred to it under Subdivision 707 ‑ A because the transferor met the conditions in section 165 ‑ 12.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 719-260 — Special test for utilising a loss because a company maintains the same owners

Meeting the conditions in section 165 ‑ 12 (1) The focal company is taken to meet the conditions in section 165 ‑ 12 for the claim year and the loss if and only if the company (the test company ) identified in relation to the focal company in accordance with section 719 ‑ 265 would have met those conditions for that year on the relevant assumptions in: (a) section 719 ‑ 270 (which is about assuming the test company made the loss for a particular income year); and (b) section 719 ‑ 275 (which is about assuming that nothing happened in relation to certain things that would affect whether the test company would meet those conditions); and (c) section 719 ‑ 280 (which is about assuming that the test company would have failed to meet those conditions in certain circumstances). Focal company’s failure to meet conditions in section 165 ‑ 12 (2) The focal company is taken to fail to meet a condition in section 165 ‑ 12 only at: (a) the first time the test company would have failed to meet the condition on the relevant assumptions mentioned in subsection (1); or (b) the * test time described in subsection 166 ‑ 5(6) for the test company, if: (i) Division 166 is relevant to working out whether the test company could have * utilised the loss for the claim year on the relevant assumptions mentioned in paragraphs (1)(a) and (b); and (ii) the test company is not assumed under section 719 ‑ 280 to fail to meet the condition before the test time. Note: If the focal company is taken to fail to meet a condition in section 165 ‑ 12, the focal company will not be able to utilise the loss for the claim year unless the focal company meets the condition in section 165 ‑ 13 by satisfying the business continuity test. That test applies to the focal company (and not the test company). Business continuity test for focal company under Division 166 (3) If subsection 166 ‑ 5(5) affects whether the focal company can * utilise the loss for the claim year because the focal company is a * widely held company or an * eligible Division 166 company, or both, during the year, subsection 166 ‑ 5(6) operates as if it required the * business continuity test to be applied to the * business the focal company carried on just before the time described in subsection (2) of this section. Business continuity test for focal company to transfer loss (4) If subsection 707 ‑ 125(4) is relevant to working out whether the focal company can transfer the loss to a company under Subdivision 707 ‑ A, that subsection: (a) has effect as if subsection 707 ‑ 125(5) described the focal company’s income year containing the time at which the focal company is taken under subsection (2) of this section to fail to meet a condition in section 165 ‑ 12; and (b) has effect despite subsection (3) of this section. Note: For working out whether certain losses can be transferred under Subdivision 707 ‑ A, subsection 707 ‑ 125(4) modifies the operation of subsection 166 ‑ 5(6) by extending the business continuity test period to include the income year described in subsection 707 ‑ 125(5).

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 142 of 2003, effective s 4, Sch 1 (items 1–15, 18–40), Sch 2 (items 1, 2, 4–29, 33–49, 52, 53), Sch 3, Sch 7 (items 1–23) and Sch 8 (items 4–17, 17A, 17B, 18–21, 24(2), (3)): 17 Dec 2003 (s 2(1) items 1–5, 10, 11, 13) | Amended by No 147 of 2005, effective Schedule 1 (items 4–168, 169(2), 170–176), Schedule 2 (items 1, 12–24, 26–28), Schedule 3, Schedule 4 (items 4–12), Schedule 5 (items 13, 14, 20), Schedule 6 (items 1, 2, 10(1)) and Schedule 7 (items 14–16, 20): Royal Assent | Amended by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 7 of 2019, effective Sch 1 (items 1–13, 33–164): 1 Apr 2019 (s 2(1) item 1)

s 719-265 — What is the test company?

(1) To identify for the purposes of section 719 ‑ 260 the company that is the test company for the focal company for the loss: (a) first, identify the test company for the focal company by applying whichever one of subsections (2), (3), (3A), (4) and (6) is relevant; and (b) then, if the condition in column 1 of an item of the table is met, apply this section again to identify the test company as if the company described in column 2 of the item were the focal company, taking account only of things that happened before the event described in column 3 of the item. Repeated application of this section Column 1 If the test company for the focal company is identified: Column 2 Apply this section again as if this company were the focal company: Column 3 Take account only of things that happened before this event: 1 Under subsection (2) as the company that is the test company for the transferor The transferor mentioned in subsection (2) The transfer mentioned in subsection (2) 2 Under subsection (6) as the company that is the test company for the first head company The first head company mentioned in subsection (6) The first head company ceasing to be the * head company of the * MEC group mentioned in subsection (6) Note: More than 2 applications of this section may be needed to identify the test company for the focal company. COT transfer of loss to focal company (2) The test company for the focal company is the company described in column 2 of the relevant item of the table if the focal company made the loss because of a * COT transfer to the focal company. Test company for the focal company Column 1 If: Column 2 The test company for the focal company is: 1 The focal company and the transferor are the same company The focal company 2 The focal company and the transferor are different companies The company that is the test company for the transferor Loss transferred because business continuity test satisfied (3) The test company for the focal company is the company described in column 2 of the relevant item of the table if the focal company made the loss because the loss was transferred under Subdivision 707 ‑ A to the focal company from a company because it satisfied the * business continuity test for: (a) the * business continuity test period; and (b) the * test time specified in Division 165 or 166 or section 707 ‑ 125. Test company for the focal company Column 1 If: Column 2 The test company for the focal company is: 1 The focal company was the * head company of a * MEC group at the time of the transfer The company that was the * top company for the MEC group at the time of the transfer 2 The focal company was not the * head company of a * MEC group at the time of the transfer The focal company Transfer of tax loss from designated infrastructure project entity (3A) If: (a) the focal company made the loss because the loss was transferred under Subdivision 707 ‑ A to the focal company as the * head company of a * MEC group; and (b) subsection 707 ‑ 120(5) (about designated infrastructure project entities joining consolidated groups) applies to the transfer; the test company for the focal company is the company that was the * top company for the MEC group at the time of a transfer. Loss not transferred from a company (4) The test company for the focal company is the company described in column 2 of the relevant item of the table if the focal company made the loss apart from a transfer of the loss under Subdivision 707 ‑ A from a company. Test company for the focal company Column 1 If: Column 2 The test company for the focal company is: 1 The focal company made the loss apart from Subdivision 707 ‑ A and was the * head company of a * MEC group at the start of the income year for which it made the loss The company that was the * top company for the MEC group at the start of the income year 2 The focal company made the loss because it was transferred under Subdivision 707 ‑ A to the focal company as the * head company of a * MEC group from an entity other than a company The company that was the * top company for the MEC group at the time of the transfer 3 Neither item 1 nor item 2 applies The focal company Relationship between subsections (2), (3) and (4) (5) Subsection (2) or (3), and not subsection (4), is relevant for identifying the test company for the focal company if the focal company made the loss apart from a transfer under Subdivision 707 ‑ A, and later transferred the loss to itself under that Subdivision. Change of head company (6) If, under section 719 ‑ 90, the focal company is taken to have made the loss because: (a) a company (the first head company ) other than the focal company made the loss apart from that section and either: (i) was the * head company of a * MEC group at any time during the income year for which it made the loss; or (ii) became the head company of a MEC group after that income year (without having been a * subsidiary member of the group before becoming the head company); and (b) the focal company was later the head company of the MEC group; the test company for the focal company is the company that is the test company for the first head company. Note: Section 719 ‑ 90 applies if there is a change in the head company of a MEC group, treating the later head company as if what had happened to the earlier head company had happened to the later head company. (7) Subsections (2), (3), (3A) and (4) and section 719 ‑ 90 have effect subject to subsection (6) of this section.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22) | Amended by No 21 of 2015, effective s 4 and Sch 6 (items 1, 2, 16–25, 73): 19 Mar 2015 (s 2(1) items 1, 7–11, 13) Sch 1 (items 1–17, 49), Sch 3 and Sch 7 (items 13–21): 20 Mar 2015 (s 2(1) items 2, 4, 15) Sch 4 (items 1–5, 9–17): 1 July 2015 (s 2(1) item 5) Sch 6 (items 51–59, 74–79): never commences (s 2(1) items 12, 14) | Amended by No 7 of 2019, effective Sch 1 (items 1–13, 33–164): 1 Apr 2019 (s 2(1) item 1)

s 719-270 — Assumptions about the test company having made the loss for an income year

If test company was top company for focal company’s MEC group (1) If the test company was the * top company for a * MEC group and the focal company is or was the * head company of that MEC group, assume that the test company made the loss for an income year starting at the relevant time shown in the table. Start of income year for which test company is assumed to have made loss If: The relevant time is: 1 The focal company made the loss apart from Subdivision 707 ‑ A The start of the income year for which the focal company made the loss 2 The focal company made the loss because it was transferred to the focal company under Subdivision 707 ‑ A The time of the transfer Note: Subsection (1) applies even if the test company is still the top company for the MEC group at the end of the claim year. If test company is focal company or first head company (2) If the test company is: (a) the focal company; or (b) the first head company identified in subsection 719 ‑ 265(6) by reference to the focal company; assume that the test company made the loss for an income year starting at the relevant time shown in the table. Start of income year for which test company is assumed to have made loss If: The relevant time is: 1 The test company made the loss apart from Subdivision 707 ‑ A (even if the test company later transferred the loss to itself in a * COT transfer) The start of the income year for which the test company made the loss 2 The test company made the loss because it was transferred to the test company under Subdivision 707 ‑ A in a transfer other than a * COT transfer (even if the test company first made the loss apart from that Subdivision) The time of the transfer (3) If the test company is the first head company, disregard section 719 ‑ 90 for the purposes of working out the relevant time using the table in subsection (2) of this section. Note: This ensures that section 719 ‑ 90 does not make the items in the table inapplicable by treating the test company as if another company had made the loss instead of the test company. If subsections (1) and (2) do not apply (4) If neither subsection (1) nor subsection (2) applies, assume that the test company made the loss for an income year starting at the relevant time shown in the table. Start of income year for which test company is assumed to have made loss If: The relevant time is: 1 The test company made the loss apart from Subdivision 707 ‑ A (even if the test company later transferred the loss to itself in a * COT transfer) The start of the income year for which the test company made the loss 2 The test company made the loss because it was transferred to the test company under Subdivision 707 ‑ A in a transfer other than a * COT transfer (even if the test company first made the loss apart from that Subdivision) The time of the transfer 3 The test company is the test company for the focal company for the loss because the test company was the * top company for a * MEC group whose * head company made the loss before it was transferred to the focal company under Subdivision 707 ‑ A The time that was the relevant time under subsection (1) for the test company as the test company for the first company for which the test company was the test company for the loss Note: Subsection (4) applies if the focal company made the loss because of a COT transfer of the loss to the focal company from another company. (5) Disregard section 719 ‑ 90 for the purposes of items 1 and 2 of the table in subsection (4) of this section if the test company was identified using subsection 719 ‑ 265(6). Note: This ensures that section 719 ‑ 90 does not make those items inapplicable by treating the test company as if another company had made the loss instead of the test company. Other events do not override assumption (6) If the test company transferred the loss to itself or another company under Subdivision 707 ‑ A, assume that the transfer did not affect, for income years ending after the transfer: (a) the fact that the test company made the loss; or (b) the income year for which the test company is assumed (under subsection (1), (2) or (4)) to have made the loss.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 719-275 — Assumptions about nothing happening to affect direct and indirect ownership of the test company

(1) This section sets out an assumption that must be made whenever an event described in subsection (2) occurs: (a) after the time assumed under section 719 ‑ 270 to be the start of the income year for which the test company made the loss; and (b) before the end of the claim year; (whether or not the test company or the focal company is one of the companies mentioned in the description of the event). (2) Assume that, after an event described in an item of the table, nothing happens in relation to * membership interests or voting power in an entity described in the item that would affect whether the test company would meet the conditions in section 165 ‑ 12 for the claim year and the loss. Assumption about nothing happening to membership interests or voting power If this event occurs: Assume that nothing happens in relation to membership interests or voting power in: 1 There is a * COT transfer of the loss to the * head company of a * MEC group (but not from a company that was the head company of another MEC group just before the transfer) The transferor or an entity that was at the time of the transfer interposed between the transferor and the * top company for the MEC group 2 There is a * COT transfer of the loss to the * head company of a * MEC group from a company that was the head company of another MEC group just before the transfer The company that was just before the transfer the * top company for the other MEC group, or an entity that was at the time of the transfer interposed between that company and the top company of the MEC group to whose head company the loss was transferred 3 There is a change in the identity of the * top company for a * MEC group whose * head company has made the loss The company that ceased to be the top company for the MEC group as part of the change or an entity that was at the time of the change interposed between that company and the company that became the top company for the MEC group as part of the change 4 A company that has made the loss becomes at a time the * head company of a * MEC group (as the first company to be the head company of the group) and has not before that time transferred the loss to another company under Subdivision 707 ‑ A The company or an entity that was at the time interposed between the company and the * top company for the MEC group 5 There is a * COT transfer of the loss to the * head company of a * consolidated group from another company The other company or an entity that was at the time of the transfer interposed between the other company and the head company (3) For the purposes of this section, a company is taken to make a loss: (a) at the start of the income year for which the company makes the loss, if it makes the loss apart from a transfer under Subdivision 707 ‑ A (even if the company later transfers the loss to itself under that Subdivision); or (b) at the time the loss is transferred to the company under that Subdivision, if the company makes the loss because of that transfer. (4) Disregard section 719 ‑ 90 for the purposes of making an assumption on the basis of item 1 of the table in subsection (2) of this section if (apart from that section): (a) the * COT transfer mentioned in that item was from the * head company of the * MEC group to itself; and (b) for an income year starting after the transfer, another company was the head company of the group.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 719-280 — Assumptions about the test company failing to meet the conditions in section 165 ‑ 12

(1) Assume that the test company fails to meet the conditions in section 165 ‑ 12 at the time an event described in subsection (2), (3) or (4) happens after the start of the * ownership test period for the focal company in relation to: (a) the * MEC group whose * head company was the focal company; or (b) the * potential MEC group whose membership was the same as the membership of that MEC group. Note: If the test company is assumed to fail to meet the conditions in section 165 ‑ 12 for the claim year and the loss, the focal company is taken (under section 719 ‑ 260) to have failed to meet those conditions. (2) One event is the * potential MEC group ceasing to exist. (3) Another event is something happening that meets these conditions: (a) the thing happens at a time in relation to * membership interests in one or more of these entities: (i) a company that was just before that time a * member of the * MEC group and an * eligible tier ‑ 1 company of the * top company for the MEC group; (ii) an entity interposed between a company described in subparagraph (i) and the company that was the top company for the group just before that time; (b) the thing does not cause the * potential MEC group to cease to exist but does cause a change in the identity of the top company for the potential MEC group. (4) Another event is the * MEC group ceasing to exist because there ceases to be a * provisional head company of the group. Other causes of failure to meet conditions in section 165 ‑ 12 (5) To avoid doubt, this section does not limit the circumstances in which the test company would have failed to meet the conditions in section 165 ‑ 12 on the relevant assumptions set out in sections 719 ‑ 270 and 719 ‑ 275.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 719-285 — Business continuity test and change of head company

In working out whether the * business continuity test is satisfied by a company that, after the * test time, became the * head company of a * MEC group that existed before that time, disregard what happened in relation to the company before it became a * member of the group. Section 719 ‑ 90 has effect subject to this section. Note 1: The business continuity test is to be applied on the basis that the company’s business at the test time was the business that section 719 ‑ 90 treats the company as having carried on at that time, except to the extent that section 719 ‑ 90 attributes to the company its actual history before it became a member of the MEC group. Note 2: Section 719 ‑ 90 applies if there is a change in the head company of a MEC group, treating the later head company as if what had happened to the earlier head company had happened to the later head company.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 147 of 2005, effective Schedule 1 (items 4–168, 169(2), 170–176), Schedule 2 (items 1, 12–24, 26–28), Schedule 3, Schedule 4 (items 4–12), Schedule 5 (items 13, 14, 20), Schedule 6 (items 1, 2, 10(1)) and Schedule 7 (items 14–16, 20): Royal Assent | Amended by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 7 of 2019, effective Sch 1 (items 1–13, 33–164): 1 Apr 2019 (s 2(1) item 1)

s 719-300 — Application

(1) Sections 719 ‑ 305, 719 ‑ 310, 719 ‑ 315, 719 ‑ 320 and 719 ‑ 325 operate only if: (a) a company (the ongoing head company ) is the * head company of a * MEC group for an income year or a period in an income year; and (b) an event (the application event ) described in subsection (2) or (3) happens at a time in the income year in relation to the group. (2) One application event is that another company (the new tier ‑ 1 member ) becomes both a * member of the * MEC group and an * eligible tier ‑ 1 company of the * top company for the group. (3) The other application event is that the * MEC group comes into existence as a result of a * special conversion event happening to the * potential MEC group derived from the ongoing head company. Note: This application event happens only if the ongoing head company was the head company of a consolidated group just before the special conversion event. Exceptions for events involving subsidiary members of group (4) Those sections do not operate because of the event described in subsection (2) if the new tier ‑ 1 member was a * subsidiary member of the * MEC group immediately before the event. (5) Those sections do not operate because of the event described in subsection (3) if all the other companies that are described in paragraph 719 ‑ 40(1)(c) and are involved in the * special conversion event were * subsidiary members of the * consolidated group just before the event. (6) Subsections (4) and (5) have effect despite subsection (1).

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11)

s 719-305 — Subdivision 707 ‑ C affects utilisation of losses made by ongoing head company while it was head company

(1) For income years ending after the application event happened, Subdivision 707 ‑ C affects the * utilisation of all losses (the prior group losses ) of any * sort that the ongoing head company made (apart from Subdivision 707 ‑ A) for an income year that: (a) was an income year during which the * MEC group was in existence (or, if the application event involved the MEC group coming into existence because of a * special conversion event involving a * consolidated group, the consolidated group was in existence); and (b) was before the income year in which the event happened. Prior group losses taken to have been transferred at time of event (2) The ongoing head company is taken to have transferred the prior group losses to itself under Subdivision 707 ‑ A at the time of the application event, for the purposes of: (a) the application of Subdivision 707 ‑ C in relation to the * utilisation of the prior group losses and other losses; and (b) future applications of this section and section 719 ‑ 310. Available fraction for bundle of losses (3) For the purpose of working out the * available fraction for the * bundle of the prior group losses at the time of the transfer, work out the ongoing head company’s * modified market value at the time of the application event as if: (a) the ongoing head company had become a * member of a * consolidated group at the time; and (b) each * subsidiary member of the MEC group or consolidated group of which the ongoing head company was the * head company just before the event were a part of the ongoing head company (and not a separate entity) at the time of the event; and (c) each subsidiary member of that group at an earlier time had been a part of the ongoing head company (and not a separate entity) at the earlier time. Deemed transfer does not affect year of loss (4) Subdivision 707 ‑ C affects the * utilisation as if each of the prior group losses had been made by the ongoing head company for the income year for which the company actually made the loss (and not the income year in which the application event happened). Subsection (2) has effect subject to this subsection.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11)

s 719-310 — Adjustment of available fractions for bundles of losses previously transferred to ongoing head company

(1) This section affects the * available fraction for each * bundle of losses that were transferred to the ongoing head company under Subdivision 707 ‑ A before the application event. (2) The available fraction for the * bundle is reduced or maintained just after the event by multiplying it by this fraction: Note: The market value of the ongoing head company at the time just before or just after the application event will be worked out on the basis that subsidiary members of the MEC group or consolidated group headed by the ongoing head company at that time are part of the ongoing head company, because of section 701 ‑ 1 (the single entity rule). (3) Item 3 of the table in subsection 707 ‑ 320(2) does not apply to affect the * available fraction for the * bundle because of: (a) the transfer mentioned in section 719 ‑ 305; or (b) the transfer (if any) to the ongoing head company of a loss of any * sort under Subdivision 707 ‑ A at the time of the application event from an entity that became a * subsidiary member of the * MEC group as a result of the event.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20)

s 719-315 — Further adjustment of available fractions for all bundles

(1) If, because of the application event: (a) there is under section 719 ‑ 305 an * available fraction for the * bundle of prior group losses; and (b) section 719 ‑ 310 affects the available fraction for one or more other bundles of losses; this section affects the available fraction for every one of those bundles. (2) The available fraction (as affected by section 719 ‑ 305 or 719 ‑ 310) is reduced by multiplying it by this fraction: (3) For the purposes of working out the fraction in subsection (2), use the value of an * available fraction for a * bundle of losses apart from: (a) this section; and (b) if item 5 of the table in subsection 707 ‑ 320(2) would apply as a result of the calculation of the available fraction in accordance with section 719 ‑ 305 or 719 ‑ 310—that item.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11)

s 719-320 — Limit on utilising losses other than the prior group losses

(1) This section has effect for the purposes of working out how much of the losses, other than prior group losses, in a * bundle the ongoing head company can * utilise for the income year in which the application event happens. (2) For the purposes of subsection 707 ‑ 310(3), the prior group losses are to be treated as if they had not been transferred under Subdivision 707 ‑ A, to the extent to which the ongoing head company can * utilise them for the income year because they are treated as being included in a * bundle whose available fraction was 1 from the start of the income year until the time of the application event. (3) This section is a matter that is relevant for the purposes of paragraph 707 ‑ 335(3)(f), if section 707 ‑ 335 applies to the ongoing head company’s * utilisation of the losses in the * bundle for the income year. Note: That section applies to a company’s utilisation for an income year of losses in a bundle if the losses are transferred under Subdivision 707 ‑ A after the start of the year or if the value of the available fraction for the bundle changes during the year while the company is treated as having made the losses because of that Subdivision. (4) Section 719 ‑ 305 has effect subject to this section.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11)

s 719-325 — Cancellation of all losses in a bundle

(1) The ongoing head company: (a) may choose to cancel all the losses in the * bundle of prior group losses; and (b) may choose to cancel all the losses in a * bundle of losses to which section 719 ‑ 310 applies. (2) If the ongoing head company chooses to cancel all the losses in a * bundle, subsections (3), (4), (5), (6) and (7) operate. (3) The ongoing head company cannot * utilise for the income year in which the application event happened more of the losses than it would have been able to utilise under Subdivision 707 ‑ C assuming: (a) if the losses are prior group losses: (i) the losses were in a * bundle for the income year; and (ii) the * available fraction for the bundle were 1 for the period from the start of the income year until the event happened; and (b) in any case—the available fraction for the bundle including the losses were 0 from the time of the event until the end of the income year. Note: Section 707 ‑ 335 is relevant to working out how much of the losses could be utilised, because the value of the available fraction for the bundle changes during the period described in that section. (4) The ongoing head company cannot: (a) transfer the losses to another company under Division 170 for an income year ending after the application event; or (b) transfer the losses to another company under Subdivision 707 ‑ A after the application event. This subsection has effect despite subsection (3). (5) Disregard the existence of the * bundle at and after the time of the application event for the purposes of working out the * available fraction for another * bundle of losses. (6) The losses cannot be * utilised by any entity for an income year starting after the application event. (7) The choice cannot be revoked.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11)

s 719-425 — Guide to Subdivision 719 ‑ H

This Subdivision deals with some imputation issues in relation to MEC groups. Table of sections Operative provisions 719 ‑ 430 Transfer of franking account balance on cessation event 719 ‑ 435 Distributions by subsidiary members of MEC group taken to be distributions by head company

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 719-430 — Transfer of franking account balance on cessation event

(1) This section operates if: (a) a * cessation event happens to the * provisional head company of a * MEC group (the former head company ); and (b) another company (the new head company ) is appointed as the provisional head company of the group under subsection 719 ‑ 60(3). (2) When the new head company is appointed: (a) the * franking account of the former head company ceases to operate; and (b) the new head company has a franking account; and (c) any * franking surplus or * franking deficit in the franking account of the former head company just before the * cessation event happened becomes that of the new head company.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 719-435 — Distributions by subsidiary members of MEC group taken to be distributions by head company

(1) Part 3 ‑ 6 operates as if a * frankable distribution made by an * eligible tier ‑ 1 company that: (a) is a member of a * MEC group; and (b) is not the * provisional head company of the group; had been made by the provisional head company of the group to a * member of the provisional head company. Note: Part 3 ‑ 6 deals with imputation. (2) Part 3 ‑ 6 operates as if a * frankable distribution made by a * subsidiary member of a * MEC group (the foreign ‑ held subsidiary ) that is not an * eligible tier ‑ 1 company were a frankable distribution made by the * head company of the group to a * member of the head company if: (a) the foreign ‑ held subsidiary meets the set of requirements in section 703 ‑ 45, section 701C ‑ 10 of the Income Tax (Transitional Provisions) Act 1997 or section 701C ‑ 15 of that Act; and (b) the frankable distribution is made to a foreign resident.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 719-450 — What this Subdivision is about

The head company of a MEC group is taken to meet the conditions in section 165 ‑ 123 (about maintaining the same ownership in an ownership test period to be able to deduct a bad debt) if and only if the top company for the group at the start of the period meets those conditions for the period. Table of sections Maintaining the same ownership to be able to deduct bad debt 719 ‑ 455 Special test for deducting a bad debt because a company maintains the same owners 719 ‑ 460 Assumptions about nothing happening to affect direct and indirect ownership of the test company 719 ‑ 465 Assumptions about the test company failing to meet the conditions in section 165 ‑ 123

Amendment history: Inserted by No 162 of 2005, effective Schedule 2 (items 1–13), Schedule 3 (items 1–3, 16–19, 33) and Schedule 6 (items 28–32): Royal Assent Schedule 6 (items 1–5, 7–13): 1 July 2005 Sch 6 (items 6, 16–25): 1 July 2001 (s 2(1) items 4, 6)

s 719-455 — Special test for deducting a bad debt because a company maintains the same owners

(1) This section has effect for the purposes of working out whether the * head company of a * MEC group: (a) can deduct a debt it writes off as bad; or (b) could have deducted a debt as described in subsection 709 ‑ 215(2). Note: Whether the head company of the MEC group could have deducted a debt as described in subsection 709 ‑ 215(2) is relevant under Subdivision 709 ‑ D to: (a) the question whether the head company can deduct the debt it writes off as bad, or the swap loss it makes in extinguishing the debt as part of a debt/equity swap, after the debt was owed to an entity while the entity was not a member of the MEC group; and (b) the question whether an entity that was owed the debt after it was owed to the head company can deduct the amount of the debt the entity writes off as bad or the swap loss the entity makes in extinguishing the debt as part of a debt/equity swap. (2) The * head company is taken to meet the conditions in section 165 ‑ 123 (about the company maintaining the same owners) for the * ownership test period if and only if the company (the test company ) that was the * top company for the * MEC group at the start of the same period would have met those conditions for that period on the assumptions in the following sections (if applicable): (a) section 719 ‑ 460 (which is about assuming that nothing happened in relation to certain things that would affect whether the test company would meet those conditions); (b) section 719 ‑ 465 (which is about assuming that the test company would have failed to meet those conditions in certain circumstances). Note 1: Even though subsection (2) of this section raises the issue whether the test company meets the conditions in section 165 ‑ 123, that is determined by reference to: (a) the ownership test period for the head company of the MEC group; and (b) the debt owed to the head company. Note 2: If this section is applying for the purposes of working out whether the head company could have deducted a debt as described in subsection 709 ‑ 215(2), section 709 ‑ 215 affects what is the ownership test period for the purposes of section 165 ‑ 123 as it applies for those purposes. Head company’s failure to meet conditions in section 165 ‑ 123 (3) The * head company is taken to fail to meet a condition in section 165 ‑ 123 only at: (a) the first time the test company would have failed to meet the condition on the relevant assumptions mentioned in subsection (2); or (b) the * test time described in section 166 ‑ 40 for the test company, if: (i) Division 166 is relevant to working out whether the test company met the conditions in section 165 ‑ 123 on the relevant assumption mentioned in paragraph (2)(a); and (ii) the test company is not assumed under section 719 ‑ 465 to fail to meet the condition before the test time. Note 1: If the head company is taken to fail to meet a condition in section 165 ‑ 123, the head company will not be able to deduct the debt unless that company meets the condition in section 165 ‑ 126 by satisfying the business continuity test. That test applies to the head company (and not the test company). Note 2: Section 719 ‑ 285 may affect whether the head company satisfies the business continuity test if there has been a change in the identity of the head company of the group during the ownership test period. Business continuity test for head company under Division 166 (4) If section 166 ‑ 40 directly affects whether the * head company can deduct the debt, the subsection of that section that requires the * business continuity test to be applied to a particular * business operates as if it required that test to be applied to the business the head company carried on just before the time described in subsection (3) of this section. Note: Section 166 ‑ 40 has an indirect effect on whether the head company can deduct the debt so far as that section affects whether the test company meets the conditions in section 165 ‑ 123 and therefore whether the head company is taken to meet those conditions.

Amendment history: Inserted by No 162 of 2005, effective Schedule 2 (items 1–13), Schedule 3 (items 1–3, 16–19, 33) and Schedule 6 (items 28–32): Royal Assent Schedule 6 (items 1–5, 7–13): 1 July 2005 Sch 6 (items 6, 16–25): 1 July 2001 (s 2(1) items 4, 6) | Amended by No 7 of 2019, effective Sch 1 (items 1–13, 33–164): 1 Apr 2019 (s 2(1) item 1)

s 719-460 — Assumptions about nothing happening to affect direct and indirect ownership of the test company

(1) This section sets out an assumption that must be made whenever there is a change in the identity of the * top company for the * MEC group during the * ownership test period. (2) Assume that after the change nothing happens in relation to * membership interests or voting power in the following entities that would affect whether the test company would meet the conditions in section 165 ‑ 123: (a) the company that was the * top company for the * MEC group before the change; (b) an entity (if any) that at the time of the change was interposed between: (i) the company that was the top company for the MEC group before the change; and (ii) the company that became the top company for the MEC group as part of the change.

Amendment history: Inserted by No 162 of 2005, effective Schedule 2 (items 1–13), Schedule 3 (items 1–3, 16–19, 33) and Schedule 6 (items 28–32): Royal Assent Schedule 6 (items 1–5, 7–13): 1 July 2005 Sch 6 (items 6, 16–25): 1 July 2001 (s 2(1) items 4, 6)

s 719-465 — Assumptions about the test company failing to meet the conditions in section 165 ‑ 123

(1) Assume that the test company fails to meet the conditions in section 165 ‑ 123 at the time an event described in subsection (2), (3) or (4) happens after the start of the * ownership test period in relation to: (a) the * MEC group; or (b) the * potential MEC group whose membership was the same as the membership of the MEC group. Note: If the test company is assumed to fail to meet the conditions in section 165 ‑ 123, the head company of the MEC group is taken (under section 719 ‑ 455) to have failed to meet those conditions. (2) One event is the * potential MEC group ceasing to exist. (3) Another event is something happening that meets these conditions: (a) the thing happens at a time in relation to * membership interests in one or more of these entities: (i) a company that was just before that time a * member of the * MEC group and an * eligible tier ‑ 1 company of the * top company for the MEC group; (ii) an entity interposed between a company described in subparagraph (i) and the company that was the top company for the group just before that time; (b) the thing does not cause the * potential MEC group to cease to exist but does cause a change in the identity of the top company for the potential MEC group. (4) Another event is the * MEC group ceasing to exist because there ceases to be a * provisional head company of the group. Other causes of failure to meet conditions in section 165 ‑ 123 (5) To avoid doubt, this section does not limit the circumstances in which the test company would have failed to meet the conditions in section 165 ‑ 123.

Amendment history: Inserted by No 162 of 2005, effective Schedule 2 (items 1–13), Schedule 3 (items 1–3, 16–19, 33) and Schedule 6 (items 28–32): Royal Assent Schedule 6 (items 1–5, 7–13): 1 July 2005 Sch 6 (items 6, 16–25): 1 July 2001 (s 2(1) items 4, 6)

s 719-500 — What this Subdivision is about

When an entity ceases to be a subsidiary member of a MEC group, the tax cost setting amount for the group’s membership interests in the entity is worked out in accordance with Division 711 as modified by this Division. Table of sections 719 ‑ 505 Application and object of this Subdivision 719 ‑ 510 Modified operation of paragraphs 711 ‑ 15(1)(b) and (c)

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11)

s 719-505 — Application and object of this Subdivision

Application (1) This Subdivision applies if the old group mentioned in subsection 711 ‑ 5(1) is a * MEC group. Object (2) The object of this Subdivision is to modify the rules in Division 711 so that they take account of the special characteristics of * MEC groups.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11)

s 719-510 — Modified operation of paragraphs 711 ‑ 15(1)(b) and (c)

(1) This section applies if the leaving entity mentioned in subsection 711 ‑ 15(1) is a * subsidiary member of the old group that is an * eligible tier ‑ 1 company. (2) Paragraphs 711 ‑ 15(1)(b) and (c) apply as if the membership interests mentioned in those paragraphs included * pooled interests in the * eligible tier ‑ 1 company. Note: This subsection means that, in working out tax cost setting amounts for internal interests in the eligible tier ‑ 1 company, section 711 ‑ 15 will allocate part of the old group’s allocable cost amount for the eligible tier ‑ 1 company to the pooled interests in the company. However, the tax cost of the pooled interests is not set according to section 711 ‑ 15. Subdivision 719 ‑ K contains rules that set the cost of the pooled interests.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11)

s 719-550 — What this Subdivision is about

This Subdivision contains cost setting rules for membership interests in eligible tier ‑ 1 companies that are members of a MEC group, where those interests are not held by members of the group. Table of sections 719 ‑ 555 Application and object of this Subdivision 719 ‑ 560 Pooled interests 719 ‑ 565 Setting cost of reset interests 719 ‑ 570 Cost setting amount

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11)

s 719-555 — Application and object of this Subdivision

Application (1) This Subdivision applies if: (a) one or more entities hold * pooled interests (the reset interests ) in * eligible tier ‑ 1 companies that are members of a * MEC group, just before a particular time (the trigger time ); and (b) at the trigger time, either or both of these things happen to one or more of those eligible tier ‑ 1 companies (the trigger companies ): (i) the company ceases to be a member of the group; (ii) a * CGT event happens in relation to one or more reset interests in the company; and (c) the * market value of the reset interests as a whole (including the market value of synergies arising from the combination of those interests) just before the trigger time is more than nil. Object (2) The object of this Subdivision is to set the cost of all reset interests: (a) first, by allocating to each reset interest held in a trigger company so much of the total cost of all reset interests held in members of the group that the * market value of the interest bears to the group’s market value; and (b) then, by allocating the remainder of that total cost to all reset interests held in other * eligible tier ‑ 1 companies, by dividing that remainder by the number of those interests.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11)

s 719-560 — Pooled interests

(1) A pooled interest in an * eligible tier ‑ 1 company that is a member of a * MEC group is a * membership interest in the eligible tier ‑ 1 company that is held by an entity that is not a member of the group. Note: A membership interest in the head company of a MEC group can be a pooled interest. (2) Despite subsection (1), a * membership interest is not a pooled interest if it is: (a) a * share that is disregarded under subsection 719 ‑ 30(2); or (b) held by an entity only as a nominee of one or more other entities each of which is a member of the group.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11)

s 719-565 — Setting cost of reset interests

CGT provisions—cost base (1) If Part 3.1 or 3.3 is to apply in relation to a reset interest, the Part applies as if the interest’s * cost base were increased or reduced so that the cost base just before the trigger time equals the cost setting amount worked out under section 719 ‑ 570. CGT provisions—reduced cost base (2) If Part 3.1 or 3.3 is to apply in relation to a reset interest, the Part applies as if the interest’s * reduced cost base were increased or reduced so that the reduced cost base just before the trigger time equals the cost setting amount worked out under section 719 ‑ 570. Other provisions (3) If a provision of this Act (other than Part 3.1 or 3.3) is to apply in relation to a reset interest, the provision applies as if the interest’s cost just before the trigger time were equal to the cost setting amount worked out under section 719 ‑ 570.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11)

s 719-570 — Cost setting amount

Reset interests held in trigger companies—cost setting amount for cost base etc. (1) Work out the cost setting amount for the purposes of subsections 719 ‑ 565(1) and (3) for a reset interest in a trigger company using the formula: where: market value of the group is: (a) if every * eligible tier ‑ 1 company that is a member of the group just before the trigger time is a trigger company—the sum of the * market value (just before the trigger time) of all reset interests in each of those companies; or (b) otherwise—the amount mentioned in paragraph 719 ‑ 555(1)(c). market value of the reset interest is the * market value (just before the trigger time) of all reset interests in that trigger company, in the same class as the interest, divided by the number of reset interests in that company in that class. pooled cost amount is the sum of the * cost bases (just before the trigger time) of all reset interests. Reset interests held in other eligible tier ‑ 1 companies—cost setting amount for cost base etc. (2) Work out the cost setting amount for the purposes of subsections 719 ‑ 565(1) and (3) for a reset interest that is not in a trigger company, using the formula: where: amount allocated to trigger company interests is the sum of all cost setting amounts worked out under subsection (1) for the reset interests covered by that subsection. number of non ‑ trigger company interests is the number of reset interests, other than those covered by subsection (1). pooled cost amount has the same meaning as in subsection (1). Cost setting amount for reduced cost base (3) Work out the cost setting amount for the purposes of subsection 719 ‑ 565(2) for a reset interest by applying subsections (1) and (2) of this section in relation to the interest, as if every reference in those subsections to * cost base were a reference to * reduced cost base.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20)

s 719-700 — Changeover times under section 165 ‑ 115C or 165 ‑ 115D

(1) This section has effect for the purposes of determining whether a time (the test time ) is a * changeover time under section 165 ‑ 115C (about changes in ownership) or 165 ‑ 115D (about changes in control) in respect of the * head company of a * MEC group. Modified meaning of reference time (2) The reference time is: (a) if no * changeover time has occurred in respect of the head company since the group came into existence and before the test time—when the group came into existence; or (b) otherwise—the time just after the last such changeover time. (3) Subsection (2) of this section has effect despite subsection 165 ‑ 115A(2A). Assumptions to make (4) Assume that, while the * MEC group exists: (a) the * top company for the group holds and beneficially owns all the * membership interests in the * head company (instead of whoever actually does); and (b) those membership interests remain the same; and (c) the top company directly controls the voting power in the head company.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 719-705 — Additional changeover times for head company of MEC group

(1) The time when a * potential MEC group ceases to exist is a changeover time in respect of the * head company of a * MEC group if, just before that time, the potential MEC group’s membership was the same as the membership of the MEC group. Note: The changeover times in subsections (1), (2) and (3) are based on the events described in subsections 719 ‑ 280(2), (3) and (4), each of which causes the test company referred to in section 719 ‑ 280 to be assumed to fail the continuity of ownership test in section 165 ‑ 12. (2) If something: (a) happens at a time in relation to * membership interests in one or more of these entities: (i) a company that was just before that time a * member of a * MEC group and an * eligible tier ‑ 1 company of the * top company for the MEC group; (ii) an entity interposed between a company described in subparagraph (i) and the company that was the top company for the group just before that time; and (b) does not cause the * potential MEC group whose membership is the same as the membership of the MEC group to cease to exist, but does cause a change in the identity of the top company for the potential MEC group; that time is a changeover time in respect of the * head company of the * MEC group. (3) The time when a * MEC group ceases to exist because there ceases to be a * provisional head company of the group is a changeover time in respect of the * head company of the * MEC group.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 719-720 — Alteration times under section 165 ‑ 115L or 165 ‑ 115M

(1) This section has effect for the purposes of determining whether a time (the test time ) is an * alteration time under section 165 ‑ 115L (about alterations in ownership) or 165 ‑ 115M (about alterations in control) in respect of the * head company of a * MEC group. Modified meaning of reference time (2) The reference time is: (a) if no * alteration time has occurred in respect of the head company since the group came into existence and before the test time—when the group came into existence; or (b) otherwise—the time just after the last such alteration time. (3) In applying subsection (2), disregard an * alteration time arising under subsection 719 ‑ 725(4). (4) Subsection (2) of this section has effect despite subsections 165 ‑ 115L(2) and 165 ‑ 115M(2). Assumptions to make (5) Assume that, while the * MEC group exists: (a) the * top company for the group holds and beneficially owns all the * membership interests in the * head company (instead of whoever actually does); and (b) those membership interests remain the same; and (c) the top company directly controls the voting power in the head company.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 719-725 — Additional alteration times for head company of MEC group

Additional alteration times based on section 719 ‑ 280 (1) The time when a * potential MEC group ceases to exist is an alteration time in respect of the * head company of a * MEC group if, just before that time, the potential MEC group’s membership was the same as the membership of the MEC group. Note: The alteration times in subsections (1), (2) and (3) are based on the events described in subsections 719 ‑ 280(2), (3) and (4), each of which causes the test company referred to in section 719 ‑ 280 to be assumed to fail the continuity of ownership test in section 165 ‑ 12. (2) If something: (a) happens at a time in relation to * membership interests in one or more of these entities: (i) a company that was just before that time a * member of a * MEC group and an * eligible tier ‑ 1 company of the * top company for the MEC group; (ii) an entity interposed between a company described in subparagraph (i) and the company that was the top company for the group just before that time; and (b) does not cause the * potential MEC group whose membership is the same as the membership of the MEC group to cease to exist, but does cause a change in the identity of the top company for the potential MEC group; that time is an alteration time in respect of the * head company of the * MEC group. (3) The time when a * MEC group ceases to exist because there ceases to be a * provisional head company of the group is an alteration time in respect of the * head company of the * MEC group. Additional alteration times based on Subdivision 719 ‑ K (4) If Subdivision 719 ‑ K (MEC group cost setting rules: pooling cases) applies, the time just before the trigger time referred to in paragraph 719 ‑ 555(1)(a) is an alteration time in respect of the * head company of the * MEC group.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 719-730 — Some alteration times only affect interests in top company

(1) This section applies if an * alteration time (except one arising under subsection 719 ‑ 725(4)) happens for the * head company of a * MEC group. (2) Sections 165 ‑ 115ZA and 165 ‑ 115ZB apply, in relation to the alteration time, to an interest or debt that is, or is part of, a relevant equity interest or relevant debt interest that an entity has in the * head company just before the * alteration time, only if the interest or debt is: (a) an * equity or loan interest in the * top company for the MEC group; or (b) an * indirect equity or loan interest in the top company. Note: Sections 165 ‑ 115ZA and 165 ‑ 115ZB are about the consequences that an alteration time for a loss company has for relevant equity interests and relevant debt interests in the company. (3) In determining what is a relevant equity interest or relevant debt interest that an entity has in the * head company just before the * alteration time, make the assumptions in subsection 719 ‑ 720(5).

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 719-735 — Some alteration times affect only pooled interests

(1) Sections 165 ‑ 115ZA and 165 ‑ 115ZB do not apply in relation to an * alteration time that happens for the * head company of a * MEC group because of subsection 719 ‑ 725(4) (trigger time for MEC group cost setting rules: pooling cases). (2) Instead, Subdivision 719 ‑ K applies to the * MEC group, in relation to the trigger time, on the basis that: (a) what would, apart from this section, be the pooled cost amount for the purposes of the formulas in subsections 719 ‑ 570(1) and (2) is reduced by the amount of the * head company’s overall loss under section 165 ‑ 115R or 165 ‑ 115S at that alteration time; but (b) paragraph (a) of this subsection only affects the application of those formulas because of subsection 719 ‑ 570(3) (to work out the * reduced cost base of a * membership interest).

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 719-740 — Head company does not have relevant equity or debt interest in a loss company if widely held top company does not have such an interest

(1) For the purposes of Subdivision 165 ‑ CD, treat the * head company of a * MEC group as not having a relevant equity interest in a * loss company at a particular time if: (a) the * top company of the group is a * widely held company at that time; and (b) because of subsections 165 ‑ 115X(2A), (2B) and (2C), the top company does not have a relevant equity interest under section 165 ‑ 115X in the loss company at that time. (2) For the purposes of paragraph (1)(b), disregard the operation of subsection 701 ‑ 1(1) (the single entity rule) in determining whether subsection 165 ‑ 115X(2C) has the effect that the * top company has the relevant equity interest mentioned in that paragraph. (3) For the purposes of Subdivision 165 ‑ CD, treat the * head company of a * MEC group as not having a relevant debt interest in a * loss company at a particular time if: (a) the * top company of the group is a * widely held company at that time; and (b) because of subsections 165 ‑ 115Y(3A), (3B) and (3C), the top company does not have a relevant debt interest under section 165 ‑ 115Y in the loss company at that time.

Amendment history: Inserted by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B)

s 719-755 — Effect on MEC group cost setting rules if head company is losing entity or gaining entity for indirect value shift

(1) This section has effect for the purposes of working out the consequences (if any) of an * indirect value shift if the * losing entity or * gaining entity is the * head company of a * MEC group. (Subsection (3) has effect in addition to section 727 ‑ 455.) (2) An * equity or loan interest can be an * affected interest in the * head company only if it is: (a) an * equity or loan interest in the * top company for the MEC group; or (b) an * indirect equity or loan interest in the top company. (3) Subdivision 719 ‑ K (MEC group cost setting rules: pooling cases) applies to the * MEC group, in relation to the first time referred to in that Subdivision as a trigger time that happens at or after the * IVS time, on the basis that: (a) what would, apart from this section, be the pooled cost amount for the purposes of the formulas in subsections 719 ‑ 570(1) and (2) is: (i) if the * head company is the * losing entity—reduced; or (ii) if the head company is the gaining entity—increased; by the amount of the indirect value shift; and (b) paragraph (a) of this subsection also affects the application of those formulas because of subsection 719 ‑ 570(3) (to work out the * reduced cost base of a * membership interest).

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 719-775 — Cancellation of loss

(1) This section reduces to nil a loss that would otherwise be * realised for income tax purposes by a * realisation event that happens to an * equity or loan interest (the realised interest ) in an entity (the first entity ) when it is owned by another entity (the owner ), if the conditions in subsections (2) and (4) are met. (2) The first condition is that, at some time during the period (the ownership period ) when the owner owned the realised interest: (a) the first entity was a * subsidiary member of a * MEC group (except an * eligible tier ‑ 1 company), and the owner was not a * member of the group; or (b) the realised interest was an * external indirect equity or loan interest in a subsidiary member of a MEC group (except an eligible tier ‑ 1 company); or (c) the realised interest was an * equity or loan interest in an entity that, at that time: (i) owned an equity or loan interest in a subsidiary member of a MEC group (except an eligible tier ‑ 1 company); and (ii) was not a member of the group; or (d) the realised interest was an equity or loan interest in an entity that owned at that time an external indirect equity or loan interest in a subsidiary member of a MEC group (except an eligible tier ‑ 1 company); or (e) the realised interest was an equity or loan interest, or an * indirect equity or loan interest, in an eligible tier ‑ 1 company that was a member of a MEC group at that time. (3) An * equity or loan interest in an entity (the test entity ) is an external indirect equity or loan interest in a * subsidiary member of a * MEC group if, and only if, neither the owner of the interest nor the test entity is a member of the group and: (a) the test entity owns an equity or loan interest in the subsidiary member; or (b) the test entity owns an equity or loan interest that is an external indirect equity or loan interest in the subsidiary member because of one or more other applications of this subsection. (4) The second condition is that, at the same or a different time during the ownership period: (a) the owner was, or * controlled (for value shifting purposes), the * head company of a * MEC group because of which the first condition is satisfied; or (b) the owner was an * associate of an entity that, at the same or a different time during the ownership period, was, or controlled (for value shifting purposes), the head company of such a MEC group.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 719-780 — Exception for pooled interests in eligible tier ‑ 1 companies

The first condition in section 719 ‑ 775 cannot be satisfied, because of a * MEC group, at a time when the realised interest was a * pooled interest in an * eligible tier ‑ 1 company that is a member of the group.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 719-785 — Exception for interests in top company

The first condition in section 719 ‑ 775 cannot be satisfied, because of a * MEC group, at a time when: (a) the first entity was the * top company for the MEC group; or (b) the realised interest was an * indirect equity or loan interest in the top company for the MEC group.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 719-790 — Exception for interests in entity leaving MEC group

Membership interests in leaving entity (1) If: (a) the realised interest is a * membership interest; and (b) during the ownership period the first entity ceased to be a * subsidiary member of a * MEC group; the first condition in section 719 ‑ 775 cannot be satisfied, because of that MEC group, at a time when the first entity was a member of the group, unless the interest needed to be disregarded under section 719 ‑ 30 (about employee shares) in order for the first entity to be a member of the group at that time. Liabilities owed by leaving entity (2) If the realised interest: (a) consists of a liability owed by the first entity to the owner; and (b) became an asset of the owner because subsection 701 ‑ 1(1) (the single entity rule) ceased to apply to the first entity when it ceased to be a * subsidiary member of a * MEC group; the first condition in section 719 ‑ 775 cannot be satisfied, because of that MEC group, at a time when the first entity was a member of the group.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 719-795 — Exception if loss attributable to certain matters

(1) The loss is not reduced if all of it can be shown to be attributable to things other than these: (a) something that would be reflected in what would, apart from this Part, be an overall loss under section 165 ‑ 115R or 165 ‑ 115S, of a * member of a * MEC group (an excluded group ) because of which the first condition in section 719 ‑ 775 is satisfied, at an * alteration time for that member; (b) an * indirect value shift for which, apart from this Part, a member of an excluded group would be the * losing entity or the * gaining entity. (2) If only part of the loss can be shown to be attributable to things other than the ones listed in subsection (1), the loss is reduced to the amount of that part.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 721-1 — What this Division is about

If the head company of a consolidated group fails to meet an income tax related liability by the time it becomes due and payable, entities that were subsidiary members of the group during the period to which the liability relates can also be responsible for all or part of the liability. Table of sections Object 721 ‑ 5 Object of this Division When this Division operates 721 ‑ 10 When this Division operates Joint and several liability of contributing member 721 ‑ 15 Head company and contributing members jointly and severally liable to pay group liability 721 ‑ 17 Notice of joint and several liability for general interest charge 721 ‑ 20 Limit on liability where group first comes into existence Tax sharing agreements 721 ‑ 25 When a group liability is covered by a tax sharing agreement 721 ‑ 30 TSA contributing members liable for contribution amounts 721 ‑ 32 Notice of general interest charge liability under TSA 721 ‑ 35 When a TSA contributing member has left the group clear of the group liability 721 ‑ 40 TSA liability and group liability are linked

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2)

s 721-5 — Object of this Division

The object of this Division is to secure the payment of certain tax liabilities of the * head company of a * consolidated group where the head company fails to meet all of those liabilities by the time they become due and payable. Accordingly: (a) if a relevant liability is not covered by a tax sharing agreement—this Division provides for a process to make certain entities that were * subsidiary members of the group for at least part of the period to which each tax liability relates jointly and severally liable with the head company for those liabilities; or (b) if a relevant liability is covered by a tax sharing agreement—this Division: (i) provides for a process to make each of those entities liable for the amount determined under the agreement in relation to the liability; but (ii) exempts an entity from a liability determined under the agreement if it leaves the group in certain circumstances.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2)

s 721-10 — When this Division operates

(1) This Division operates if: (a) a * tax ‑ related liability mentioned in subsection (2) (a group liability ) of the * head company of a * consolidated group was not paid or otherwise discharged in full by the time the liability became due and payable (the head company’s due time ); and (b) one or more entities (the contributing members ) were * subsidiary members of the group for at least part of the period to which the group liability relates. Note: This Division operates even if some or all of the contributing members were no longer members of the group at the head company’s due time. (2) The following table lists the * tax ‑ related liabilities for the purposes of paragraph (1)(a) and the periods to which each of those liabilities relate: Tax ‑ related liabilities of the head company and the periods to which they relate Item The tax ‑ related liability of the head company that becomes due and payable as specified in this provision ... ... relates to this period 3 section 5 ‑ 5 of the Income Tax Assessment Act 1997 (income tax, and other amounts treated in the same way as income tax under that section) the * financial year to which the income tax etc. relates 5 section 197 ‑ 70 of the Income Tax Assessment Act 1997 (untainting tax) the * franking period of the * head company in which the * untainting tax became due and payable 10 subsection 214 ‑ 150(1) of the Income Tax Assessment Act 1997 (franking tax) the income year to which the * franking tax relates 15 subsection 214 ‑ 150(2) of the Income Tax Assessment Act 1997 (franking tax—part year assessment) the particular period mentioned in subsection 214 ‑ 70(1) to which the * franking tax relates 20 subsection 214 ‑ 150(3) of the Income Tax Assessment Act 1997 (franking tax—amended assessments otherwise than because of deficit deferral) the income year (or particular period mentioned in subsection 214 ‑ 70(1)) to which the * franking tax relates 22 subsection 214 ‑ 150(4) of the Income Tax Assessment Act 1997 (franking tax—deficit deferral) the income year (or particular period mentioned in subsection 214 ‑ 70(1)) to which the * franking deficit tax relates 30 section 45 ‑ 61 in Schedule 1 to the Taxation Administration Act 1953 (quarterly * PAYG instalment) the * instalment quarter to which the * instalment relates 32 section 45 ‑ 67 in Schedule 1 to the Taxation Administration Act 1953 (monthly * PAYG instalment) the * instalment month to which the * instalment relates 35 section 45 ‑ 70 in Schedule 1 to the Taxation Administration Act 1953 (annual * PAYG instalment) the income year to which the * instalment relates 40 section 8AAE of the Taxation Administration Act 1953 (general interest charge) the period provided for in this table for the * tax ‑ related liability to which the general interest charge relates 45 subsection 45 ‑ 230(4) in Schedule 1 to the Taxation Administration Act 1953 (general interest charge on shortfall in instalment worked out on basis of varied rate) the * instalment quarter or * instalment month to which the general interest charge relates 50 subsection 45 ‑ 232(5) in Schedule 1 to the Taxation Administration Act 1953 (general interest charge on shortfall in quarterly instalment worked out on basis of estimated benchmark tax) the * instalment quarter to which the general interest charge relates 55 subsection 45 ‑ 235(5) in Schedule 1 to the Taxation Administration Act 1953 (general interest charge on shortfall in annual instalment) the income year to which the general interest charge relates 60 subsection 45 ‑ 875(2) in Schedule 1 to the Taxation Administration Act 1953 (head company’s liability to GIC on shortfall in instalment) the * instalment quarter or * instalment month to which the general interest charge relates 65 if an administrative penalty of a kind mentioned in section 284 ‑ 75, 284 ‑ 145, 286 ‑ 75 or 288 ‑ 25 in Schedule 1 to the Taxation Administration Act 1953 relates only to another * tax ‑ related liability mentioned in this table—section 298 ‑ 15 in that Schedule the period provided for in this table for the * tax ‑ related liability to which the penalty relates 70 Division 280 in Schedule 1 to the Taxation Administration Act 1953 (shortfall interest charge) the period provided for in this table for the * tax ‑ related liability to which the shortfall interest charge relates 115 Subsection 177P(3) of the Income Tax Assessment Act 1936 (diverted profits tax) the income year to which the diverted profits tax relates Note: The other amounts referred to in item 3 of the table are interest payable under section 102AAM of the Income Tax Assessment Act 1936 (distributions from certain non ‑ resident trust estates). (3) Item 30 of the table in subsection (2) is taken not to include a * PAYG instalment of the * head company if the Commissioner gave the head company its * initial head company instalment rate after the end of the * instalment quarter of the head company to which the PAYG instalment relates. (3A) Item 32 of the table in subsection (2) is taken not to include a * PAYG instalment of the * head company if the Commissioner gave the head company its * initial head company instalment rate on or after the start of the * instalment month of the head company to which the PAYG instalment relates.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 75 of 2005, effective 29 June 2005 | Amended by No 80 of 2006, effective Schedule 1 (items 2–4), Schedule 2, Schedule 4 (items 1, 5–9, 14, 20, 23–30), Schedule 5, Schedule 6 (items 3–7) and Schedule 11 (items 1, 2, 4–24): Royal Assent Schedule 3 (items 2–5): 30 June 2006 (s 2(1) item 3) | Amended by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4) | Amended by No 14 of 2012, effective Sch 2 (items 11–16): never commenced (s 2(1) item 4) Sch 3 (items 7–85, 91): 1 July 2012 (s 2(1) items 5, 7) | Amended by No 18 of 2012, effective Sch 5 (items 2–5) and Sch 6 (item 8): 1 July 2012 (s 2(1) items 11, 14) | Amended by No 88 of 2013, effective s 4, Sch 1 (items 1–18), Sch 3 and Sch 7 (items 200–210, 236–242): 28 June 2013 (s 2(1) items 1, 2, 5, 21, 26) Sch 1 (items 33, 34): 1 July 2013 (s 2(1) item 3) Sch 5 (items 1–5, 7–9) and Sch 6 (items 3–41, 50–65): 29 June 2013 (s 2(1) items 8, 9, 14) Sch 7 (items 1–4): 1 July 2012 (s 2(1) item 15) | Amended by No 124 of 2013, effective Sch 1 (items 37–45), Sch 5 (items 7, 8(1)), Sch 7, Sch 8, Sch 10 (items 1–11, 13): 29 June 2013 (s 2(1) items 2, 10–12) Sch 2 (items 2–6, 21–42, 48): 11 July 2013 (s 2(1) item 3) Sch 2 (item 66): 11 July 2013 (s 2(1) item 5) Sch 10 (item 14): never commenced (s 2(1) item 13) Sch 11 (items 1–3): 3 Dec 2012 (s 2(1) item 15) Sch 11 (items 5, 6, 9): 28 June 2013 (s 2(1) item 16) Sch 11 (items 28, 32(1), 35–56): 30 June 2013 (s 2(1) items 18, 20, 22) | Amended by No 96 of 2014, effective Sch 1 (items 14–45, 122–124), Sch 2 (items 1, 14–40, 42, 43) and Sch 3–5: 30 Sept 2014 (s 2(1) item 2) Sch 8 (items 15–22, 26) and Sch 9 (items 21, 22, 24): 31 Dec 2016 (s 2(1) items 7, 9) | Amended by No 27 of 2017, effective Sch 1 (items 14–43, 52) and Sch 3: 1 July 2017 (s 2(1) items 4, 5) | Amended by No 4 of 2018, effective Sch 6 (items 9–20, 27): 21 Feb 2018 (s 2(1) item 1) | Amended by No 43 of 2019, effective Sch 2 (items 79–92): 1 July 2019 (s 2(1) item 1)

s 721-15 — Head company and contributing members jointly and severally liable to pay group liability

(1) The following are jointly and severally liable to pay the group liability: (a) the * head company; and (b) each contributing member (other than a contributing member excluded by subsection (2)). Note: A group liability is a tax ‑ related liability in relation to the head company and each contributing member. For rights of contribution in respect of such a liability, see subsection 265 ‑ 45(2) in Schedule 1 to the Taxation Administration Act 1953 . (2) For the purposes of paragraph (1)(b), a contributing member is excluded by this subsection if it is, at the head company’s due time, prohibited according to the effect of an * Australian law from entering into any arrangement under which the entity becomes subject to a liability referred to in subsection (1). (3) Subsection (1) does not operate if the group liability is covered by a tax sharing agreement (see section 721 ‑ 25). (3A) Subsection (1) is taken never to have made a particular contributing member jointly and severally liable to pay the group liability if: (a) the group liability was taken never to have been covered by the tax sharing agreement because of subsection 721 ‑ 25(3); and Note: Subsection 721 ‑ 25(3) provides for this to happen if the Commissioner did not receive a copy of the tax sharing agreement within 14 days after the Commissioner gave the head company the notice under that subsection. (b) the Commissioner gave the contributing member written notice of the group liability under subsection (5); and (c) apart from the operation of subsection 721 ‑ 25(3), the contributing member left the group clear of the group liability in accordance with section 721 ‑ 35; and (d) the contributing member gave the Commissioner a copy of the tax sharing agreement (that is, the relevant agreement mentioned in paragraph 721 ‑ 25(1)(a)) in the * approved form; and (e) if the Commissioner gave the contributing member written notice of the group liability under subsection (5) (ignoring subsection 721 ‑ 17(2))—the contributing member gave that copy of the agreement to the Commissioner within 14 days after that notice was given. (4) The joint and several liability of the contributing members under subsection (1) arises just after the * head company’s due time. (5) The joint and several liability of a particular contributing member under subsection (1) becomes due and payable by the member 14 days after the Commissioner gives the member written notice under this subsection of the liability. Note 1: If the Commissioner gives this notice to one contributing member, and gives this notice to another contributing member on another day, the 2 contributing members will have different due and payable dates for the same liability. Note 2: This section does not affect the time at which the group liability arose for, or became due and payable by, the head company. (5A) Despite subsection (5), if the group liability is * general interest charge for a day, the joint and several liability of a particular contributing member under subsection (1) becomes due and payable by the member at the end of the day on which the Commissioner gives the member written notice of the liability under subsection (5). (6) To the extent that the contributing members’ liability under subsection (1) is not a liability for income tax, that liability is to be treated as a liability for income tax for the purposes of section 254 of the Income Tax Assessment Act 1936 .

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16)

s 721-17 — Notice of joint and several liability for general interest charge

(1) This section operates if: (a) the group liability is * general interest charge for a day in relation to another liability (the primary liability ); and (b) the Commissioner gives a particular contributing member written notice under subsection 721 ‑ 15(5) of the group liability; and (c) general interest charge arises for a subsequent day in relation to the primary liability; and (d) the general interest charge for the subsequent day has not been paid or otherwise discharged in full by the time it became due and payable. (2) The Commissioner is taken to have given the contributing member written notice under subsection 721 ‑ 15(5) of the * general interest charge for the subsequent day. The notice is taken to have been given on that day.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 721-20 — Limit on liability where group first comes into existence

(1) This section operates if the group came into existence during the period to which a group liability relates. (2) The contributing members’ liability under subsection 721 ‑ 15(1) to pay the group liability is limited to the proportion of the group liability that is reasonably attributable to the period: (a) beginning at the time the group came into existence; and (b) ending at the time when the period to which the group liability relates ends.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2)

s 721-25 — When a group liability is covered by a tax sharing agreement

(1) For the purposes of this Division, a group liability is covered by a tax sharing agreement if, just before the head company’s due time: (a) an agreement existed between the * head company of the group and one or more of the contributing members (the TSA contributing members ); and (b) a particular amount (the contribution amount ) could be determined under the agreement for each TSA contributing member in relation to the group liability; and (c) the contribution amounts for each of the TSA contributing members in relation to the group liability, as determined under the agreement, represented a reasonable allocation of the total amount of the group liability among the head company and the TSA contributing members; and (d) the agreement complied with the requirements (if any) set out in the regulations. (1A) The requirement in paragraph (1)(c) is taken to be satisfied if: (a) the group liability is a * tax ‑ related liability mentioned in item 3 of the table in subsection 721 ‑ 10(2) in relation to an income year; and (b) before, at or after the head company’s due time, the * head company of the group became entitled to either or both of the following: (i) a credit under section 45 ‑ 30 in Schedule 1 to the Taxation Administration Act 1953 for that income year; (ii) a credit under section 45 ‑ 865 in Schedule 1 to that Act for that income year; and (c) just before the head company’s due time, the contribution amounts for each of the TSA contributing members in relation to the group liability, as determined under the agreement, represented a reasonable allocation among the head company and the TSA contributing members of the difference between: (i) the total amount of the group liability; and (ii) the amount of the credit, or the sum of the credits, mentioned in paragraph (b). (1B) Despite subsections (1)and (1A), the group liability is not covered by a tax sharing agreement for the purposes of this Division if, apart from this subsection, the requirements in those subsections in relation to the group liability would be satisfied in relation to 2 or more agreements. (2) Despite subsections (1)and (1A), the group liability is not covered by a tax sharing agreement for the purposes of this Division if: (a) the agreement mentioned in paragraph (1)(a) was entered into as part of an arrangement; and (b) a purpose of the arrangement was to prejudice the recovery by the Commissioner of some or all of the amount of the group liability or liabilities of that kind. (3) Despite subsections (1)and (1A), the group liability is taken never to have been covered by a tax sharing agreement for the purposes of this Division if: (a) the Commissioner gives the * head company of the group written notice under this subsection (whether before, at or after the head company’s due time) in relation to the group liability; and (b) the notice requires the head company to give the Commissioner a copy of the agreement mentioned in paragraph (1)(a) in the * approved form within 14 days after the notice is given; and (c) the Commissioner does not receive a copy of the agreement by the time required. Note: If this subsection operates, joint and several liability can arise under section 721 ‑ 15 in relation to the group liability.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended by No 20 of 2004, effective Schedule 6: 1 July 2000 Remainder: Royal Assent | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 12 of 2012, effective s 4, Sch 2 (items 1–23), Sch 5 and Sch 6 (items 3–6, 11–20, 25, 26, 35–67, 74–83, 94–96, 117–142, 157–178, 183, 200–203, 214–217, 235–240, 248): 21 Mar 2012 (s 2(1) items 1, 3, 5, 6, 10, 14, 18, 19, 27, 31) Sch 6 (item 7): 1 July 2007 (s 2(1) item 7) Sch 6 (item 10): 1 July 2010 (s 2(1) item 9) Sch 6 (items 106–116): 22 Mar 2012 (s 2(1) items 16, 17) Sch 6 (item 143): 22 Jan 2013 (s 2(1) item 20) Sch 6 (items 146–148): never commenced (s 2(1) item 23) Sch 6 (items 179, 181): 3 Oct 2008 (s 2(1) items 28, 30) Sch 6 (item 180): 3 June 2010 (s 2(1) item 29) | Amended by No 14 of 2012, effective Sch 2 (items 11–16): never commenced (s 2(1) item 4) Sch 3 (items 7–85, 91): 1 July 2012 (s 2(1) items 5, 7) | Amended by No 96 of 2014, effective Sch 1 (items 14–45, 122–124), Sch 2 (items 1, 14–40, 42, 43) and Sch 3–5: 30 Sept 2014 (s 2(1) item 2) Sch 8 (items 15–22, 26) and Sch 9 (items 21, 22, 24): 31 Dec 2016 (s 2(1) items 7, 9)

s 721-30 — TSA contributing members liable for contribution amounts

(1) This section operates if a group liability is covered by a tax sharing agreement. (2) Each TSA contributing member is liable to pay to the Commonwealth an amount equal to the contribution amount for that member in relation to the group liability. (3) Despite subsection (2), a TSA contributing member is not liable under that subsection if the member left the group clear of the group liability (see section 721 ‑ 35). (4) The liability of a TSA contributing member under subsection (2) arises just after the * head company’s due time. (5) The liability of a TSA contributing member under subsection (2) becomes due and payable by the member 14 days after the Commissioner gives the member written notice under this subsection of the liability. Note: This section does not affect the time at which the group liability arose for, or became due and payable by, the head company. (5A) Despite subsection (5), if the group liability is * general interest charge for a day, the liability of a TSA contributing member under subsection (2) becomes due and payable by the member at the end of the day on which the Commissioner gives the member written notice of the liability under subsection (5). (6) The liability of a TSA contributing member under subsection (2) is to be treated as a liability for income tax for the purposes of section 254 of the Income Tax Assessment Act 1936 .

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 721-32 — Notice of general interest charge liability under TSA

(1) This section operates if: (a) the group liability is * general interest charge for a day in relation to another liability (the primary liability ); and (b) the Commissioner gives a particular TSA contributing member written notice under subsection 721 ‑ 30(5) of its liability under subsection 721 ‑ 30(2) in relation to the general interest charge for that day; and (c) general interest charge arises for a subsequent day in relation to the primary liability; and (d) the TSA contributing member is liable under subsection 721 ‑ 30(2) for an amount in relation to the general interest charge for the subsequent day. (2) The Commissioner is taken to have given the TSA contributing member written notice under subsection 721 ‑ 30(5) of the amount in relation to the * general interest charge for the subsequent day. The notice is taken to have been given on that day.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 721-35 — When a TSA contributing member has left the group clear of the group liability

For the purposes of subsection 721 ‑ 30(3), a TSA contributing member left the group clear of the group liability if: (a) the TSA contributing member ceased to be a member of the group at a time (the leaving time ) before the * head company’s due time; and (b) the cessation of membership was not part of an arrangement, a purpose of which was to prejudice the recovery by the Commissioner of some or all of the amount of the group liability or liabilities of that kind; and (c) before the leaving time, the TSA contributing member had paid to the head company: (i) if the contribution amount for that member in relation to the group liability could be determined before the leaving time—an amount equal and attributable to that amount; or (ii) otherwise—an amount that is a reasonable estimate of, and attributable to, that amount.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2)

s 721-40 — TSA liability and group liability are linked

(1) The liability of a TSA contributing member under subsection 721 ‑ 30(2) (the TSA liability ) is separate and distinct for all purposes from the group liability to which it relates (the linked group liability ). For example, the Commissioner may take proceedings to recover the unpaid amount of the TSA liability, proceedings to recover the unpaid amount of the linked group liability, or both. Note: The TSA contributing member will not be jointly and severally liable for the linked group liability under section 721 ‑ 15 (see subsection 721 ‑ 15(3)). However, the head company of the group remains liable for the linked group liability. Payment or discharge of TSA liability (2) If an amount is paid or applied at a particular time towards discharging the TSA liability, the linked group liability is discharged at that time to the extent of the same amount. Payment or discharge of linked group liability (3) If: (a) an amount is paid or applied at a particular time towards discharging the linked group liability; and (b) as a result, the amount unpaid on the TSA liability at that time (apart from this section) exceeds the amount unpaid on the linked group liability at that time; the TSA liability is discharged at that time to the extent of the excess. (4) Subsections (2) and (3) operate in relation to a liability under a judgment (the judgment liability ): (a) if the judgment liability is for the entire amount unpaid on the TSA liability—as if the judgment liability were the TSA liability; and (b) if the judgment liability is for the entire amount unpaid on the linked group liability—as if the judgment liability were the linked group liability. (5) This section does not discharge a liability to a greater extent than the amount of the liability. Income Tax Assessment Act 1997 No. 38, 1997 Compilation No. 266 Compilation date: 1 July 2026 Includes amendments: Act No. 17, 2025, Act No. 57, 2025, Act No. 49, 2026 and Act No. 58, 2026 This compilation is in 12 volumes Volume 1: Chapter 1, Part 1 ‑ 1 to Chapter 2, Part 2 ‑ 5 sections 1 ‑ 1 to 36 ‑ 55 Volume 2: Chapter 2, Part 2 ‑ 10 to Chapter 2, Part 2 ‑ 20 sections 40 ‑ 1 to 67 ‑ 30 Volume 3: Chapter 2, Part 2 ‑ 25 to Chapter 3, Part 3 ‑ 1 sections 70 ‑ 1 to 121 ‑ 35 Volume 4: Chapter 3, Part 3 ‑ 3 to Chapter 3, Part 3 ‑ 5 sections 122 ‑ 1 to 197 ‑ 85 Volume 5: Chapter 3, Part 3 ‑ 6 to Chapter 3, Part 3 ‑ 10 sections 200 ‑ 1 to 253 ‑ 15 Volume 6: Chapter 3, Part 3 ‑ 25 to Chapter 3, Part 3 ‑ 30 sections 275 ‑ 1 to 313 ‑ 85 Volume 7: Chapter 3, Part 3 ‑ 32 to Chapter 3, Part 3 ‑ 50 sections 315 ‑ 1 to 421 ‑ 85 Volume 8: Chapter 3, Part 3 ‑ 80 to Chapter 3, Part 3 ‑ 90 sections 615 ‑ 1 to 721 ‑ 40 Volume 9: Chapter 3, Part 3 ‑ 95 to Chapter 4, Part 4 ‑ 5 sections 723 ‑ 1 to 880 ‑ 205 Volume 10: Chapter 5, Part 5 ‑ 30 to Chapter 6, Part 6 ‑ 5 sections 900 ‑ 1 to 995 ‑ 1 Volume 11: Endnotes 1 to 3 Volume 12: Endnote 4 Each volume has its own contents About this compilation This compilation This is a compilation of the Income Tax Assessment Act 1997 that shows the text of the law as amended and in force on 1 July 2026 (the compilation date ). The notes at the end of this compilation (the endnotes ) include information about amending laws and the amendment history of provisions of the compiled law. Uncommenced amendments The effect of uncommenced amendments is not shown in the text of the compiled law. The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. Any uncommenced amendments affecting the law are accessible on the Register (www.legislation.gov.au). Application, saving and transitional provisions If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes. Editorial changes For more information about any editorial changes made in this compilation, see the endnotes. Presentational changes The Legislation Act 2003 provides for First Parliamentary Counsel to make presentational changes to a compilation. Presentational changes are applied to give a more consistent look and feel to legislation published on the Register, and enable the user to more easily navigate those documents. Modifications If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. Any modifications affecting the law are accessible on the Register. Self ‑ repealing provisions If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes. Contents

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 723-1 — Object

The purpose of this Division is to reduce a loss that would otherwise be * realised for income tax purposes by a * realisation event happening to an asset (except a * depreciating asset), to the extent that: (a) value has been shifted out of the asset by the owner creating in an associate a right over the asset; and (b) the value shifted was not brought to tax when the right was created and has not since been brought to tax on a realisation of the right.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 723-10 — Reduction in loss from realising non ‑ depreciating asset over which right has been created

(1) A loss that would, apart from this Division, be * realised for income tax purposes by a * realisation event is reduced by the amount worked out under subsections (3) and (4) if: (a) the event happens to a * CGT asset (the underlying asset ) you own that, at the time of the event (the realisation time ): (i) is not a * depreciating asset; or (ii) is an item of your * trading stock; or (iii) is a * revenue asset of yours; and (b) before the realisation time: (i) you created in an * associate of yours; or (ii) an entity covered by subsection (2) (about previous owners of the underlying asset) created in an associate of the entity; a right in respect of the underlying asset; and (c) immediately before the realisation time, the right is still in existence and is owned by an associate of yours; and (d) a decrease in the underlying asset’s * market value is reasonably attributable to the creating of the right; and (e) creating the right involved a * CGT event: (i) whose * capital proceeds are less than the market value of the right when created (the difference between those capital proceeds and that market value is called the shortfall on creating the right ); and (ii) that is not a CGT event that happens to some part of the underlying asset but not to the remainder of it; and (f) the shortfall on creating the right is more than $50,000; and (g) the market value of the underlying asset at the realisation time is less than it would have been if the right no longer existed at that time (the difference is called the deficit on realisation ). Note: If subparagraph (1)(e)(ii) applies, the cost base and reduced cost base of the underlying asset is apportioned under section 112 ‑ 30, so there is no need for this section to apply to the right. (2) This subsection covers an entity if: (a) the entity * acquired the underlying asset before you did; and (b) there has been a roll ‑ over for each * CGT event (if any) as a result of which an entity (including you) acquired the asset after the first entity acquired it, and before the realisation time; and (c) for each such CGT event (if any), the entity (including you) that acquired the underlying asset as a result of the event was, immediately after the event, an * associate of the entity that last acquired the asset before the event. (3) The amount by which this section reduces the loss is the lesser of: (a) the shortfall on creating the right; and (b) the deficit on realisation. However, that amount is reduced by each gain that: (c) is * realised for income tax purposes by a * realisation event that happens to the right: (i) before or at the realisation time for the underlying asset; and (ii) at a time when the right is owned by an entity that is your * associate immediately before the realisation time for the underlying asset; and (d) is not disregarded. Note: To work out a gain realised for income tax purposes by a realisation event that happens to the right, see sections 977 ‑ 15, 977 ‑ 35, 977 ‑ 40 and 977 ‑ 55. If more than one of those sections applies to the right, see section 723 ‑ 50. (4) For each gain that: (a) is * realised for income tax purposes by a * realisation event that happens to the right: (i) within 4 years after the realisation time for the underlying asset; and (ii) at a time when the right is owned by an entity that is your * associate immediately before the realisation time for the underlying asset; and (b) is not disregarded; the amount worked out under subsection (3) is taken to have been reduced by the amount of that gain. Note: This subsection may result in amendment of an assessment for the income year in which the realisation time happens.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20)

s 723-15 — Reduction in loss from realising non ‑ depreciating asset at the same time as right is created over it

(1) A loss that would, apart from this Division, be * realised for income tax purposes by a * realisation event is reduced by the amount worked out under subsections (2) and (3) if: (a) the event happens to a * CGT asset (the underlying asset ) you own that, at the time of the event (the realisation time ): (i) is not a * depreciating asset; or (ii) is an item of your * trading stock; (iii) is a * revenue asset of yours; and (b) at the realisation time, you create in an * associate of yours a right in respect of the underlying asset; and (c) creating the right involves a * CGT event: (i) whose * capital proceeds are less than the * market value of the right when created (the difference between those capital proceeds and that market value is called the shortfall on creating the right ); and (ii) that is not a CGT event that happens to some part of the underlying asset but not to the remainder of it; and (d) the shortfall on creating the right is more than $50,000; and (e) the market value of the underlying asset at the realisation time is less than it would have been if the right had not been created (the difference is called the deficit on realisation ). Note: If subparagraph (1)(c)(ii) applies, the cost base and reduced cost base of the underlying asset is apportioned under section 112 ‑ 30, so there is no need for this section to apply to the right. (2) The amount by which this section reduces the loss is the lesser of: (a) the shortfall on creating the right; and (b) the deficit on realisation. (3) For each gain that: (a) is * realised for income tax purposes by a * realisation event that happens to the right: (i) within 4 years after the realisation time for the underlying asset; and (ii) at a time when the right is owned by an entity that is your * associate immediately before the realisation time for the underlying asset; and (b) is not disregarded; the amount worked out under subsection (2) is taken to have been reduced by the amount of that gain. Note 1: To work out a gain realised for income tax purposes by a realisation event that happens to the right, see sections 977 ‑ 15, 977 ‑ 35, 977 ‑ 40 and 977 ‑ 55. If more than one of those sections applies to the right, see section 723 ‑ 50. Note 2: This subsection may require amendment of an assessment for the income year in which the realisation time happens.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20)

s 723-20 — Exceptions

Conservation covenant over land (1) Section 723 ‑ 10 or 723 ‑ 15 does not reduce a loss if: (a) the underlying asset is land; and (b) the right referred to in paragraph 723 ‑ 10(1)(b) or 723 ‑ 15(1)(b) is a * conservation covenant over the land. Right created on death of owner (2) Section 723 ‑ 10 or 723 ‑ 15 does not reduce a loss if the right referred to in paragraph 723 ‑ 10(1)(b) or 723 ‑ 15(1)(b) is created by: (a) a will or codicil; or (b) an order of a court varying or modifying a will or codicil; or (c) a total or partial intestacy; or (d) an order of a court varying or modifying the application of the law about distributing the estate of someone who dies intestate.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 723-25 — Realisation event that is only a partial realisation

(1) Section 723 ‑ 10 or 723 ‑ 15 applies differently if: (a) a * realisation event happens to some part of a * CGT asset (the underlying asset ) you own that, at the time of the event: (i) is not a * depreciating asset; or (ii) is an item of your * trading stock; or (iii) is a * revenue asset of yours; but not to the remainder of the underlying asset; or (b) a realisation event consists of creating an interest in a CGT asset (also the underlying asset ) you own that, at the time of the event, is covered by subparagraph (a)(i), (ii) or (iii). (2) The section applies on the basis that: (a) the * realisation event happens to the underlying asset; and (b) the shortfall on creating the right referred to in paragraph 723 ‑ 10(1)(e) or 723 ‑ 15(1)(c); and (c) the deficit on realisation referred to in paragraph 723 ‑ 10(1)(g) or 723 ‑ 15(1)(e); are each reduced by multiplying its amount by this fraction: (3) For the purposes of the formula in subsection (2): market value of part means the * market value, at the time of the * realisation event, of the part referred to in paragraph (1)(a) or the interest referred to in paragraph (1)(b), as appropriate. market value of underlying asset means the * market value, immediately before the * realisation event, of the underlying asset.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20)

s 723-35 — Multiple rights created to take advantage of the $50,000 threshold

(1) Sections 723 ‑ 10 and 723 ‑ 15 apply differently if, having regard to all relevant circumstances, it is reasonable to conclude that the sole or main reason why a right was created as a different right from one or more other rights created in respect of the same thing was so that paragraph 723 ‑ 10(1)(f) or 723 ‑ 15(1)(d) would not be satisfied for one or more of the rights mentioned in this subsection. (2) Those sections: (a) apply to that thing, in relation to each of the rights mentioned in subsection (1) of this section, as if paragraphs 723 ‑ 10(1)(f) and 723 ‑ 15(1)(d) were omitted; and (b) are taken always to have so applied.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 723-40 — Application to CGT asset that is also trading stock or revenue asset

If a * CGT asset you own is also an item of your * trading stock or a * revenue asset, this Division applies to the asset once in its character as a CGT asset and again in its character as trading stock or a revenue asset.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 723-50 — Effects if right created over underlying asset is also trading stock or a revenue asset

(1) Subsection 723 ‑ 10(3) or (4) or 723 ‑ 15(3) applies differently if the right created in respect of the underlying asset is also * trading stock or a * revenue asset at the time of a * realisation event that happens to the right. (2) The gain that is taken into account for the purposes of that subsection is: (a) if the right is also * trading stock—worked out under section 977 ‑ 35 or 977 ‑ 40 (about realisation events for trading stock); or (b) if the right is also a * revenue asset—the greater of: (i) the gain worked out under section 977 ‑ 15 (about realisation events for CGT assets); and (ii) the gain worked out under section 977 ‑ 55 (about realisation events for revenue assets).

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 12 of 2012, effective s 4, Sch 2 (items 1–23), Sch 5 and Sch 6 (items 3–6, 11–20, 25, 26, 35–67, 74–83, 94–96, 117–142, 157–178, 183, 200–203, 214–217, 235–240, 248): 21 Mar 2012 (s 2(1) items 1, 3, 5, 6, 10, 14, 18, 19, 27, 31) Sch 6 (item 7): 1 July 2007 (s 2(1) item 7) Sch 6 (item 10): 1 July 2010 (s 2(1) item 9) Sch 6 (items 106–116): 22 Mar 2012 (s 2(1) items 16, 17) Sch 6 (item 143): 22 Jan 2013 (s 2(1) item 20) Sch 6 (items 146–148): never commenced (s 2(1) item 23) Sch 6 (items 179, 181): 3 Oct 2008 (s 2(1) items 28, 30) Sch 6 (item 180): 3 June 2010 (s 2(1) item 29)

s 723-105 — Reduced cost base of interest reduced when interest realised at a loss

(1) The * reduced cost base of a * primary equity interest, * secondary equity interest, or * indirect primary equity interest, in a company or trust is reduced just before a * realisation event that is a * CGT event happens to the interest if: (a) apart from this Division, a loss would be * realised for income tax purposes by the CGT event; and (b) apart from this Division, a loss would have been * realised for income tax purposes by a realisation event if the event had happened, just before the CGT event, to a * CGT asset (the underlying asset ) that the company or trust then owned and that: (i) was not then a * depreciating asset; or (ii) was then an item of * trading stock of the company or trust; or (iii) was then a * revenue asset of the company or trust; and (c) the loss referred to in paragraph (b) would have been reduced under Subdivision 723 ‑ A by an amount (the underlying asset loss reduction ); and (d) for the entity (the transferor ) that owned the interest just before the CGT event, the interest was a * direct roll ‑ over replacement or * indirect roll ‑ over replacement for the underlying asset. (2) If the interest was a * direct roll ‑ over replacement, its * reduced cost base is reduced by the amount worked out using this formula, unless that amount does not appropriately reflect the matters referred to in subsection (4): (3) For the purposes of the formula in subsection (2): RCB of interest means the interest’s * reduced cost base when the transferor * acquired it. total of RCBs of direct roll ‑ over replacements means the total of the * reduced cost bases of all * direct roll ‑ over replacements for the underlying asset when the transferor * acquired them. (4) If: (a) the interest was an * indirect roll ‑ over replacement; or (b) the amount worked out under subsection (2) does not appropriately reflect the matters referred to in this subsection; the interest’s * reduced cost base is reduced by an amount that is appropriate having regard to these matters: (c) the underlying asset loss reduction; and (d) the quantum of the interest relative to all * direct roll ‑ over replacements and indirect roll ‑ over replacements that the transferor owns or has previously owned.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 723-110 — Direct and indirect roll ‑ over replacement for underlying asset

(1) For an entity (the transferor ) that owns a * CGT asset, the CGT asset is a direct roll ‑ over replacement for something (the underlying asset ) that another entity owns if, and only if: (a) a * CGT event happened to the underlying asset while the transferor owned it; and (b) the other entity * acquired the underlying asset as a result of that CGT event; and (c) there was a * replacement ‑ asset roll ‑ over for the CGT event; and (d) the transferor received the CGT asset (or CGT assets including it) in respect of the CGT event as the replacement asset (or the replacement assets). (2) For an entity (the transferor ) that owns a * CGT asset, the CGT asset is an indirect roll ‑ over replacement for something (the underlying asset ) that another entity owns if, and only if: (a) a * CGT event happened to another CGT asset at a time when the transferor owned it and the other entity already owned the underlying asset; and (b) for the transferor, the other CGT asset was at that time: (i) a * direct roll ‑ over replacement for the underlying asset; or (ii) an indirect roll ‑ over replacement for the underlying asset because of any other application or applications of this subsection; and (c) there was a * replacement ‑ asset roll ‑ over for the CGT event; and (d) the transferor received the first CGT asset (or CGT assets including it) in respect of the CGT event as the replacement asset (or the replacement assets).

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20)

s 725-1 — What this Division is about

If, under a scheme, value is shifted from equity or loan interests in a company or trust to other equity or loan interests in the same company or trust (including interests issued at a discount), this Division: (a) adjusts the value of those interests for income tax purposes to take account of material changes in market value that are attributable to the value shift; and (b) treats the value shift as a partial realisation to the extent that value is shifted between interests held by different owners, and in some other cases. However, it does so only for interests that are owned by entities involved in the value shift.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 725-45 — Main object

(1) The main object of this Division is: (a) to prevent inappropriate losses from arising on the realisation of * equity or loan interests from which value has been shifted to other equity or loan interests in the same entity; and (b) to prevent inappropriate gains from arising on the realisation of equity or loan interests in the same entity to which the value has been shifted; so far as those interests are owned by entities involved in the value shift. (2) This is done by: (a) adjusting the value of those interests for income tax purposes to take account of changes in * market value that are attributable to the value shift; and (b) treating the value shift as a partial realisation to the extent that value is shifted: (i) between interests held by different owners; or (ii) in the case of interests in their character as CGT assets—from post ‑ CGT assets to pre ‑ CGT assets; or (iii) between interests of different characters.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20)

s 725-50 — When a direct value shift has consequences under this Division

A * direct value shift under a * scheme involving * equity or loan interests in an entity (the target entity ) has consequences for you under this Division if, and only if: (a) the target entity is a company or trust at some time during the * scheme period; and (b) section 725 ‑ 55 (Controlling entity test) is satisfied; and (c) section 725 ‑ 65 (Cause of the value shift) is satisfied; and (d) you are an * affected owner of a * down interest, or an * affected owner of an * up interest, or both; and (e) neither of sections 725 ‑ 90 and 725 ‑ 95 (about direct value shifts that are reversed) applies. Note: For a down interest of which you are an affected owner, the direct value shift has consequences under this Division only if section 725 ‑ 70 (about material decrease in market value) is satisfied.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 725-55 — Controlling entity test

An entity (the controller ) must * control (for value shifting purposes) the target entity at some time during the period starting when the * scheme is entered into and ending when it has been carried out. (That period is the scheme period .) For the concept of control (for value shifting purposes) , see sections 727 ‑ 355 to 727 ‑ 375.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 725-65 — Cause of the value shift

(1) It must be the case that one or more of the following: (a) the target entity; (b) the controller; (c) an entity that was an * associate of the controller at some time during or after the * scheme period; (d) an * active participant in the * scheme; (either alone or together with one or more other entities) did under the scheme the one or more things: (e) to which the decrease in the * market value of the * down interests is reasonably attributable; and (f) to which the increase in the market value of the * up interests, or the issue of up interests at a * discount, is reasonably attributable, or that is or include the issue of up interests at a * discount. Active participants (if target entity is closely held) (2) An entity (the first entity ) is an active participant in the * scheme if, and only if: (a) at some time during the * scheme period, the target entity has fewer than 300 members (in the case of a company) or fewer than 300 beneficiaries (in the case of a trust); and (b) the first entity has actively participated in, or directly facilitated, the entering into or carrying out of the * scheme (whether or not it did so at the direction of some other entity); and (c) the first entity: (i) owns a * down interest at the * decrease time; or (ii) owns an * up interest at the * increase time or has an up interest issued to it at a * discount because of the * direct value shift. When an entity has 300 or more members or beneficiaries (3) Section 124 ‑ 810 (under which certain companies and trusts are not regarded as having 300 or more members or beneficiaries) also applies for the purposes of this Division. (4) In addition, this Division applies to a * non ‑ fixed trust as if it did not have 300 or more beneficiaries.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20)

s 725-70 — Consequences for down interest only if there is a material decrease in its market value

(1) For a * down interest of which you are an * affected owner, the * direct value shift has consequences under this Division only if the sum of the decreases in the * market value of all down interests because of direct value shifts under the same * scheme as the direct value shift is at least $150,000. Note: In working out the sum of the decreases in market value of all down interests, it will be necessary to include decreases not only in your down interests, but also in those of other affected owners and of entities that are not affected owners. (2) However, if, having regard to all relevant circumstances, it is reasonable to conclude that the sole or main reason why a * direct value shift happened under a different scheme from one or more other direct value shifts was so that subsection (1) would not be satisfied for one or more of the direct value shifts mentioned in this subsection, subsection (1) does not apply (and is taken never to have applied) to any of the direct value shifts.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20)

s 725-80 — Who is an affected owner of a down interest?

An entity is an affected owner of a * down interest if, and only if, the entity owns the down interest at the * decrease time and at least one of these paragraphs is satisfied: (a) the entity is the controller; (b) the entity was an * associate of the controller at some time during or after the * scheme period; (c) the entity is an * active participant in the * scheme.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 725-85 — Who is an affected owner of an up interest?

An entity is an affected owner of an * up interest if, and only if: (a) there is at least one * affected owner of * down interests; and (b) the entity owns the up interest at the * increase time, or the interest is an up interest because it was issued to the entity at a * discount; and at least one of these paragraphs is satisfied: (c) the entity is the controller; (d) the entity was an * associate of the controller at some time during or after the * scheme period; (e) at some time during or after the scheme period, the entity was an associate of an entity that is an affected owner of down interests because it was an associate of the controller at some time during or after that period; (f) the entity is an * active participant in the * scheme.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 725-90 — Direct value shift that will be reversed

(1) The * direct value shift does not have consequences for you under this Division if: (a) the one or more things referred to in paragraph 725 ‑ 145(1)(b) brought about a state of affairs, but for which the direct value shift would not have happened; and (b) as at the time referred to in that paragraph, it is more likely than not that, because of the * scheme, that state of affairs will cease to exist within 4 years after that time. Example: Under a scheme, the voting rights attached to a class of shares in a company are changed. As a result, the market value of shares in that class decreases, and the market value of other classes of shares in the company increases. The company’s constitution provides that the change is to last for only 3 years. (2) However, this section stops applying if the state of affairs referred to in paragraph (1)(a) still exists: (a) at the end of those 4 years; or (b) when a * realisation event happens to * down interests or * up interests of which you are, or any other entity is, an * affected owner; whichever happens sooner. (3) If this section stops applying, it is taken never to have applied to the * direct value shift. Note: This may result in an assessment for an earlier income year having to be amended to give effect to the consequences that the direct value shift would have had for you under this Division if this section hadn’t applied.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 725-95 — Direct value shift resulting from reversal

(1) A * direct value shift does not have consequences for any entity under this Division if: (a) section 725 ‑ 90 applies, and the state of affairs referred to in paragraph 725 ‑ 90(1)(a) ceases to exist; and (b) the direct value shift would not have happened but for that state of affairs ceasing to exist. (2) However, if section 725 ‑ 90 stops applying, this section is taken never to have applied to the later direct value shift.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)

s 725-145 — When there is a direct value shift

(1) There is a direct value shift under a * scheme involving * equity or loan interests in an entity (the target entity ) if: (a) there is a decrease in the * market value of one or more equity or loan interests in the target entity; and (b) the decrease is reasonably attributable to one or more things done under the scheme, and occurs at or after the time when that thing, or the first of those things, is done; and (c) either or both of subsections (2) and (3) are satisfied. Examples of something done under a scheme are issuing new shares at a * discount, buying back shares or changing the voting rights attached to shares. (2) One or more * equity or loan interests in the target entity must be issued at a * discount. The issue must be, or must be reasonably attributable to, the thing, or one or more of the things, referred to in paragraph (1)(b). It must also occur at or after the time referred to in that paragraph. Example: A company runs a family business. There are 2 shares originally issued for $2 each. They are owned by husband and wife. The market value of the shares is much greater (represented by the value of the assets of the company less its liabilities). The company issues one more share for $2 to their son. Caution is needed in such a situation. The example would result in a large CGT liability for the husband and wife under this Division, because they have shifted 1/3 of the value of their own shares to their son. No such liability would arise if the share had been issued for its market value. (3) Or, there must be an increase in the * market value of one or more * equity or loan interests in the target entity. The increase must be reasonably attributable to the thing, or to one or more of the things, referred to in paragraph (1)(b). It must also occur at or after the time referred to in that paragraph.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20)

s 725-150 — Issue of equity or loan interests at a discount

(1) An * equity or loan interest is issued at a discount if, and only if, the * market value of the interest when issued exceeds the amount of the payment that the issuing entity receives. The excess is the amount of the discount . (2) The payment that the issuing entity receives can include property. If it does, use the * market value of the property in working out the amount of the payment. Amounts for which bonus equities are treated as being issued (3) If: (a) a * primary equity interest is issued as mentioned in subsection 130 ‑ 20(1) (about bonus equities issued in relation to original equities); and (b) subsection 130 ‑ 20(3) does not apply (about bonus equities that are a dividend or otherwise assessable income); subsection (1) of this section applies to the interest as if the amount of the payment that the issuing entity receives were equal to the * cost base of the interest when issued (as worked out under section 130 ‑ 20). (4) If: (a) a * primary equity interest is issued as mentioned in subsection 6BA(1) of the Income Tax Assessment Act 1936 (about bonus shares issued in relation to original shares); and (b) subsection 6BA(2) of that Act applies (about bonus shares that are a dividend); subsection (1) of this section applies to the interest as if the amount of the payment that the issuing entity receives were equal to the consideration worked out under subsection 6BA(2) of that Act. (5) If both of subsections (3) and (4) apply to the issue of the same * primary equity interest, subsection (1) of this section applies to the interest as if the amount of the payment that the issuing entity receives were equal to the greater of the amounts worked out under subsections (3) and (4). Application of subsections (3), (4) and (5) (6) Subsection (3) does not apply if, for the income year in which the interest is issued, the issuing entity is a public trading trust within the meaning of section 102R of the Income Tax Assessment Act 1936 . (7) Subsections (3), (4) and (5) have effect only for the purposes of working out whether a * direct value shift has happened and, if so, its consequences (if any) under this Division.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20) | Amended by No 53 of 2016, effective Sch 1 (item 1), Sch 2, Sch 3 (items 2–4), Sch 4 (items 1–5), Sch 5 (items 2, 29–67, 75), Sch 6 (items 21–34), Sch 8 (item 1) and Sch 9: 5 May 2016 (s 2(1) items 2, 4)

s 725-155 — Meaning of down interests , decrease time , up interests and increase time

(1) An * equity or loan interest in the target entity is a down interest if a decrease in its * market value is reasonably attributable to the one or more things referred to in paragraph 725 ‑ 145(1)(b), and occurs at or after the time referred to in that paragraph. The time when the decrease happens is called the decrease time for that interest. (2) An * equity or loan interest in the target entity is an up interest if subsection 725 ‑ 145(2) or (3) is satisfied for the interest. The time when the interest is issued at a * discount, or the increase in * market value happens, is called the increase time for that interest.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20)

s 725-160 — What is the nature of a direct value shift?

(1) The * direct value shift has 2 aspects. (2) Overall, it consists of: (a) the decreases in * market value of the down interests; and (b) the issue at a * discount of the up interests covered by subsection 725 ‑ 145(2); and (c) the increases in market value of the up interests covered by subsection 725 ‑ 145(3). (3) This Division also proceeds on the basis that the * direct value shift is from each of the * down interests to each of the * up interests.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20)

s 725-165 — If market value decrease or increase is only partly attributable to the scheme

If it is reasonable to conclude that an increase or decrease in * market value, or the issuing of an * equity or loan interest at a * discount, is only partly caused by the doing of the one or more things under the * scheme, this Division applies to the increase, decrease, or issue at a discount, to that extent only.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3) | Amended by No 58 of 2006, effective s. 4, Schedules 1, 2, Schedule 3 (items 1–3, 7), Schedule 4, Schedule 5 (items 1–3) and Schedule 7 (items 51–113, 213–216, 257–263): Royal Assent Sch 7 (items 179–188): 1 July 2004 (s 2(1) item 15) Sch 7 (item 189): 5 July 1999 (s 2(1) item 16) Sch 7 (item 190): 30 June 2000 (s 2(1) item 17) Sch 7 (item 191): 24 Oct 2002 (s 2(1) item 18) Sch 7 (item 192): 30 June 2004 (s 2(1) item 19) Sch 7 (item 193): 22 Dec 1999 (s 2(1) item 20)

s 725-205 — Consequences depend on character of down interests and up interests

(1) The consequences for you of the * direct value shift depend on the character of the * down interests and * up interests of which you are an * affected owner. (2) There are consequences for all your * down interests and * up interests in their character as * CGT assets. However, some of them may also be * trading stock or * revenue assets. There are additional consequences for those interests in their character as trading stock or revenue assets. Note: For example, you may own a down interest that is a CGT asset and a revenue asset. Sections 725 ‑ 240 to 725 ‑ 255 set out the consequences for you of a shift in value from that interest in its character as a CGT asset. The cost base of the asset will be decreased, which will affect the calculation of a capital gain when a CGT event happens to the interest. Section 725 ‑ 320 sets out the consequences for you of a shift in value from that interest in its character as a revenue asset. The adjustment made under that section will affect the calculation of any profit on the sale of the interest. Any overlap between the capital gain and the profit realised on the sale of the interest is then dealt with under section 118 ‑ 20. In some instances, the direct value shift may result in a taxing event generating a gain for you in the income year in which the shift happens. That gain will be both a capital gain (because the down interest can be characterised as a CGT asset) and an increase in your assessable income (because the down interest can be characterised as a revenue asset). Again, any overlap is dealt with under section 118 ‑ 20.

Amendment history: Inserted by No 90 of 2002, effective s 4, Sch 1–6, 12, Sch 14 (items 1–15, 17–19), Sch 15 (items 1, 3–15, 19–89) and Sch 16 (items 1, 21–55): 24 Oct 2002 (s 2(1) items 1, 2, 4, 5) Sch 13: 29 June 2002 (s 2(1) item 3)