Income Tax Assessment Act 1997

s 715-255 — Consequences if leaving entity is a loss company at the leaving time

(1) If: (a) section 715 ‑ 245 or 715 ‑ 250 applies; and (b) the leaving entity is a * loss company at the leaving time; and (ba) the * head company has a relevant equity interest under section 165 ‑ 115X in the leaving entity at the leaving time; the head company must choose whether subsection (2) or (3) of this section has effect for the purposes of applying, to each * membership interest in the leaving entity, in relation to the time just before the leaving time, whichever of these provisions is appropriate: (c) subsection 701 ‑ 55(3) (about trading stock); (d) subsection 701 ‑ 55(5), but only so far as it relates to working out the * reduced cost base of a * membership interest that was * acquired on or after 20 September 1985; (e) subsection 701 ‑ 55(6) (about revenue assets). Note: Section 701 ‑ 55 is about setting the tax cost of an asset. (1A) For the purposes of paragraph (1)(ba), in determining whether the * head company has the relevant equity interest, disregard the operation of subsection 701 ‑ 1(1) (the single entity rule) in applying subsections 165 ‑ 115X(2C) and 165 ‑ 115X(4). (2) If the * head company chooses this subsection, the interest’s * tax cost setting amount (apart from this section) just before the leaving time is reduced to nil. (3) If the * head company chooses this subsection, the interest’s * tax cost setting amount (apart from this section) just before the leaving time is reduced by the adjustment amount under section 165 ‑ 115ZB, which is calculated on the basis that: (a) just before the leaving time, all the * membership interests in the leaving entity constituted a single relevant equity interest under section 165 ‑ 115X that the head company had in the leaving entity; and (b) the adjustment amount is worked out and applied in accordance with subsection 165 ‑ 115ZB(6), but disregarding the paragraphs of that subsection except paragraphs 165 ‑ 115ZB(6)(a) and (d). (4) The * head company’s choice must be made within 6 months after the leaving time, or within a further period allowed by the Commissioner. (5) After that 6 months, or that further period, the head company is taken to have chosen subsection (2) unless it is established that the head company made a different choice within that 6 months or further period. Non ‑ membership equity interests (6) Subsection 711 ‑ 15(2) (which treats * non ‑ membership equity interests as * membership interests) also applies for the purposes of this section, on the basis that the * consolidated group referred to in section 715 ‑ 240 is the old group referred to in that subsection.

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 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 715-260 — If neither of sections 715 ‑ 245 and 715 ‑ 250 applies

(1) This section applies if: (a) no * alteration time has occurred in relation to the * head company of the * consolidated group since the formation time and before the leaving time; and (b) the leaving time is not an * alteration time for the leaving entity under subsection 715 ‑ 245(2). (2) The leaving entity’s first * alteration time after the leaving time is determined: (a) on the basis that the reference time under subsection 165 ‑ 115L(2) or 165 ‑ 115M(2) is the time just after the formation time; and (b) making the additional assumptions in section 715 ‑ 290. (3) If the leaving entity uses the * individual asset method of working out its * adjusted unrealised loss at that first * alteration time, then for the purposes of: (a) step 1 of the method statement in subsection 165 ‑ 115U(1); and (b) the method statement in subsection 165 ‑ 115W(1); the leaving entity is taken to have had no earlier alteration time.

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 715-265 — 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 * consolidated group as not having a relevant equity interest in a * loss company at a particular time if: (a) the head company is an * eligible tier ‑ 1 company of a * top company at that time; and (b) the top company is a * widely held company at that time; and (c) 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)(c), 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 * consolidated group as not having a relevant debt interest in a * loss company at a particular time if: (a) the head company is an * eligible tier ‑ 1 company of a * top company at that time; and (b) the top company is a * widely held company at that time; and (c) 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 715-270 — Subdivision 165 ‑ CD applies

(1) At and after the time (the leaving time ) when a trust ceases to be a * subsidiary member of a * consolidated group, Subdivision 165 ‑ CD (about reductions after alterations in ownership or control of loss company) applies to the trust on the basis set out in this section. (2) The trust is taken to be a company. (3) The leaving time is the only alteration time in respect of the trust. (4) The trust is a loss company at that time if, and only if, it has an * adjusted unrealised loss at that time. If so, that adjusted unrealised loss is its overall loss at that time. (5) If the trust is a * loss company at the leaving time and the * head company has a relevant equity interest under section 165 ‑ 115X in the leaving entity at the leaving time, the head company must choose whether subsection (6) or (7) of this section has effect for the purposes of applying, to each * membership interest in the trust, in relation to the time just before the leaving time, whichever of these provisions is appropriate: (a) subsection 701 ‑ 55(3) (about trading stock); (b) subsection 701 ‑ 55(5), but only so far as it relates to working out the * reduced cost base of a * membership interest that was * acquired on or after 20 September 1985; (c) subsection 701 ‑ 55(6) (about revenue assets). Note: Section 701 ‑ 55 is about setting the tax cost of an asset. (5A) For the purposes of subsection (5), in determining whether the * head company has the relevant equity interest, disregard the operation of subsection 701 ‑ 1(1) (the single entity rule) in applying subsections 165 ‑ 115X(2C) and 165 ‑ 115X(4). (6) If the * head company chooses this subsection, the interest’s * tax cost setting amount (apart from this section) just before the leaving time is reduced to nil. (7) If the * head company chooses this subsection, the interest’s * tax cost setting amount (apart from this section) just before the leaving time is reduced by the adjustment amount under section 165 ‑ 115ZB, which is calculated on the basis that: (a) just before the leaving time: (i) all the * membership interests in the leaving entity constituted a single relevant equity interest under section 165 ‑ 115X that the * head company had in the leaving entity; and (ii) each of those interests was an equity under section 165 ‑ 115X that the * head company had in the leaving entity; and (b) the adjustment amount is worked out and applied in accordance with subsection 165 ‑ 115ZB(6), but disregarding the paragraphs of that subsection except paragraphs 165 ‑ 115ZB(6)(a) and (d). (8) The * head company’s choice must be made within 6 months after the leaving time, or within a further period allowed by the Commissioner. (9) After that 6 months, or that further period, the head company is taken to have chosen subsection (6) unless it is established that the head company made a different choice within that 6 months or further period. Non ‑ membership equity interests (10) Subsection 711 ‑ 15(2) (which treats * non ‑ membership equity interests as * membership interests) also applies for the purposes of this section, on the basis that the * consolidated group is the old group referred to in that subsection.

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 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 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 715-290 — Additional assumptions to be made when using reference time

The additional assumptions to be made are that, throughout the period starting at the reference time and ending just before the leaving time: (a) the leaving entity was in existence; and (b) the * head company held and beneficially owned all the * membership interests in the leaving entity (instead of whoever actually did); and (c) those membership interests remained the same; and (d) the head company directly controlled the voting power in the leaving entity.

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 715-310 — What is a 170 ‑ D deferred loss , and when it revives

(1) A * capital loss, deduction, or partner’s share of a deduction, that section 170 ‑ 270 (about transactions within linked groups) requires to be disregarded is a 170 ‑ D deferred loss made: (a) by the company that paragraph 170 ‑ 255(1)(a) refers to as the originating company; and (b) at the time of the event that paragraph refers to as the deferral event; and (c) on the * CGT asset * acquired by the other entity referred to in that paragraph. (2) The * 170 ‑ D deferred loss revives at the time when section 170 ‑ 275 (as applying in relation to the deferral event) treats the originating company as having made a * capital loss, or having become entitled to a deduction, in respect of that asset.

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 715-355 — Head company’s own deferred losses at formation time

(1) This section applies if, at the time (the formation time ) when a * consolidated group comes into existence, the * head company has (otherwise than because of section 701 ‑ 5 (Entry history rule)) a * 170 ‑ D deferred loss that: (a) it made on a * CGT asset that is a * 165 ‑ CC tagged asset of the head company because of paragraph 165 ‑ 115A(1A)(b) (which covers CGT assets on which it has 170 ‑ D deferred losses); and (b) has not * revived. (2) If a * loss denial pool of the * head company is created under section 715 ‑ 60 at the formation time, each * 170 ‑ D deferred loss of that kind that the head company has at that time is added to the loss denial pool at that time. (3) Otherwise, a loss denial pool of the * head company is created at the formation time if: (a) the formation time is not a * changeover time for the head company; and (b) the head company’s * final RUNL just before the formation time (as reduced by any reductions under section 715 ‑ 50 or 715 ‑ 55) was greater than nil; and (c) the head company does not satisfy the * business continuity test for: (i) the period (the business continuity test period ) consisting of the head company’s * trial year; and (ii) the time (the test time ) just before the * changeover time. Note: Paragraph (3)(b) has the effect that if the head company has 165 ‑ CC tagged assets that are affected by section 715 ‑ 50 or 715 ‑ 55 (because they are membership interests in, or accounting liabilities owed by, another group member), those sections are applied before this section. (4) When it is created because of subsection (3), the pool consists of each * 170 ‑ D deferred loss covered by subsection (2), and its loss denial balance is equal to the * final RUNL referred to in paragraph (3)(b). Note: The pool is distinct from any other loss denial pool of the head company, for example, one created at the formation time under section 715 ‑ 360.

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 715-360 — Deferred losses brought in by subsidiary member

(1) This section applies if, just before the time (the membership time ) when a company (the deferred loss company ) becomes a * subsidiary member of a * consolidated group, it had a * 170 ‑ D deferred loss that: (a) it made on a * CGT asset that is a * 165 ‑ CC tagged asset of the company at the membership time because of paragraph 165 ‑ 115A(1A)(b) (which covers CGT assets on which it has 170 ‑ D deferred losses); and (b) as at the membership time has not * revived. (2) If a * loss denial pool of the * head company is created under subsection 715 ‑ 70(2) because of the deferred loss company becoming a * subsidiary member of the group, each * 170 ‑ D deferred loss of that kind that the deferred loss company had just before the membership time is added to the loss denial pool at that time. (3) Otherwise, a loss denial pool of the * head company is created at the membership time if: (a) the membership time is not a * changeover time for the head company; and (b) the deferred loss company’s * final RUNL just before the membership time (as reduced by any reductions under section 715 ‑ 50 or 715 ‑ 55) was greater than nil; and (c) the deferred loss company does not satisfy the * business continuity test for: (i) the period (the business continuity test period ) consisting of the deferred loss company’s * trial year; and (ii) the time (the test time ) just before the * changeover time. Note 1: The 170 ‑ D deferred losses become those of the head company at the formation time because of section 701 ‑ 5 (Entry history rule). Note 2: Paragraph (3)(b) has the effect that if the deferred loss company has other 165 ‑ CC tagged assets affected by section 715 ‑ 50 or 715 ‑ 55 (because the membership time is when the group comes into existence, and the other 165 ‑ CC tagged assets are membership interests in, or accounting liabilities owed by, another group member), those sections are applied before this section. (4) When it is created because of subsection (3), the pool consists of each 170 ‑ D deferred loss covered by subsection (2), and its loss denial balance is equal to the * final RUNL referred to in paragraph (3)(b). Note: The pool is distinct from any other loss denial pool of the head company, for example, one created under this section because another entity becomes a subsidiary member of the group at the membership time.

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 715-365 — How loss denial balance is applied when 170 ‑ D deferred loss revives

(1) If a * 170 ‑ D deferred loss on a * CGT asset is in a * loss denial pool of an entity when the loss * revives, the * capital loss or deduction that section 170 ‑ 275 would, apart from this section, treat the entity as having made or become entitled to at that time in respect of the asset is reduced by the lesser of: (a) the amount of the capital loss or deduction; and (b) the pool’s * loss denial balance (as reduced by any previous reductions under section 715 ‑ 130, subsection 715 ‑ 160(1) or this subsection); and the loss denial balance is reduced by the same amount. (2) Subsection (1) applies to * 170 ‑ D deferred losses in the order in which they * revive. If 2 or more revive at the same time, it applies to them in whichever order the entity determines. (3) Subsection (1) reduces a * loss denial balance before section 715 ‑ 130 does, unless the * realisation event happens after the leaving time referred to in that 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)

s 715-370 — Cost setting—reference time for determining currency exchange rate effect

(1) This section applies if: (a) an entity (the joining entity ) becomes a * subsidiary member of a * consolidated group at a time (the joining time ); and (b) taking into account the operation of subsection 701 ‑ 1(1) (the single entity rule), the * head company of the group held an asset at the joining time because the joining entity became a subsidiary member of the group; and (c) the asset is a reset cost base asset at the joining time (within the meaning of section 705 ‑ 35); and (d) in working out the asset’s * tax cost setting amount, the currency exchange rate of a particular * foreign currency is taken into account in determining the * market value of the asset. (2) For the purposes of Division 775, determine the extent of any * currency exchange rate effect after the joining time in relation to the asset, by reference to the currency exchange rate for the * foreign currency at the joining 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 715-375 — Cost setting on joining—amount of liability that is Division 230 financial arrangement

(1) Subsection (2) applies if: (a) an entity (the joining entity ) becomes a * subsidiary member of a * consolidated group at a time (the joining time ); and (b) a thing (the accounting liability ) is, in accordance with * accounting standards, or statements of accounting concepts made by the Australian Accounting Standards Board, a liability of the joining entity at the joining time (disregarding subsection 701 ‑ 1(1) (the single entity rule)) that can or must be recognised in the entity’s statement of financial position; and (c) the accounting liability is or is part of a * Division 230 financial arrangement of the head company at the joining time (because of subsection 701 ‑ 1(1) (the single entity rule)). (2) For the purposes of Division 230 and Schedule 1 to the Tax Laws Amendment (Taxation of Financial Arrangements) Act 2009 , treat the * head company of the group as starting to have the accounting liability at the joining time for receiving a payment equal to: (a) if the liability is or is part of a * Division 230 financial arrangement of the head company at the joining time (because of subsection 701 ‑ 1(1) (the single entity rule)): (i) to which Subdivision 230 ‑ B (accruals method or realisation method) applies; or (ii) to which Subdivision 230 ‑ E (hedging financial arrangements method) applies; the amount of the liability, as determined in accordance with: (iii) the joining entity’s * accounting principles for tax cost setting; or (iv) if the amount of the liability cannot be determined in accordance with the joining entity’s accounting principles for tax cost setting—comparable standards for accounting made under a * foreign law; or (b) otherwise—the liability’s * Division 230 starting value at the joining time.

Amendment history: Inserted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3) | Amended by No 99 of 2012, effective s 4 and Sch 3: 29 June 2012 (s 2(1) items 1, 7–10) Sch 1 (items 10, 11, 23): 30 June 2012 (s 2(1) item 3) Sch 2 (items 1–4, 6): 26 Mar 2009 (s 2(1) item 6) | Amended by No 14 of 2018, effective Sch 1: 1 Apr 2018 (s 2(1) items 2–4)

s 715-378 — Cost setting on joining—head company’s right to receive or obligation to provide payment

(1) This section applies in relation to an asset or a liability if: (a) an entity (the joining entity ) becomes a subsidiary member of a consolidated group at a time (the joining time ); and (b) the asset or liability becomes that of the head company of the group because subsection 701 ‑ 1(1) (the single entity rule) applies at the joining time; and (c) in the case of an asset—subsection 701 ‑ 55(5A) applies in relation to the asset at the joining time; and (d) in the case of a liability—subsection 715 ‑ 375(2) applies in relation to the liability at the joining time. (2) In the case of an asset, for the purposes of section 230 ‑ 60, assume that the * head company of the group acquired the asset at the joining time (as mentioned in subsection 701 ‑ 55(5A)) in return for the head company starting to have an obligation to provide the payment mentioned in that subsection. (3) In the case of a liability, for the purposes of section 230 ‑ 60, assume that the * head company of the group started to have the liability at the joining time (as mentioned in subsection 715 ‑ 375(2)) in return for the head company starting to have a right to receive the payment mentioned in that subsection.

Amendment history: Inserted by No 99 of 2012, effective s 4 and Sch 3: 29 June 2012 (s 2(1) items 1, 7–10) Sch 1 (items 10, 11, 23): 30 June 2012 (s 2(1) item 3) Sch 2 (items 1–4, 6): 26 Mar 2009 (s 2(1) item 6) | Amended by No 14 of 2018, effective Sch 1: 1 Apr 2018 (s 2(1) items 2–4)

s 715-379 — Cost setting on leaving—amount of intragroup liability that is Division 230 financial arrangement

(1) Subsection (2) applies if: (a) an entity (the leaving entity ) ceases to be a * subsidiary member of a * consolidated group at a time (the leaving time ); and (b) a thing (the accounting liability ) is, in accordance with * accounting standards, or statements of accounting concepts made by the Australian Accounting Standards Board: (i) a liability of the leaving entity at the leaving time that can or must be recognised in the entity’s statement of financial position; or (ii) a liability of the * head company of the group at the leaving time that can or must be recognised in the head company’s statement of financial position; and (c) because subsection 701 ‑ 1(1) (the single entity rule) ceases to apply to the leaving entity at the leaving time: (i) if subparagraph (b)(i) applies—the accounting liability becomes a liability of the leaving entity, and an asset (the corresponding asset ) that consists of the liability becomes an asset of the head company; or (ii) if subparagraph (b)(ii) applies—the accounting liability becomes a liability of the head company, and an asset (the corresponding asset ) that consists of the liability becomes an asset of the leaving entity; and (d) the corresponding asset’s * tax cost is set at the leaving time under: (i) if subparagraph (b)(i) applies—section 701 ‑ 20; or (ii) if subparagraph (b)(ii) applies—section 701 ‑ 45; and (e) the accounting liability is or is part of a * Division 230 financial arrangement. (2) For the purposes of Division 230 of this Act and Schedule 1 to the Tax Laws Amendment (Taxation of Financial Arrangements) Act 2009 : (a) if subparagraph (1)(b)(i) applies—treat the leaving entity as starting to have the accounting liability at the leaving time for receiving a payment equal to the * tax cost setting amount of the corresponding asset; or (b) if subparagraph (1)(b)(ii) applies—treat the * head company as starting to have the accounting liability at the leaving time for receiving a payment equal to the tax cost setting amount of the corresponding asset. Note: The tax cost setting amount of the corresponding asset is determined under sections 701 ‑ 60 and 701 ‑ 60A.

Amendment history: Inserted by No 14 of 2018, effective Sch 1: 1 Apr 2018 (s 2(1) items 2–4)

s 715-379A — Cost setting on leaving—head company’s or leaving entity’s right to receive or obligation to provide payment

(1) This section applies in relation to an asset or a liability if: (a) an entity (the leaving entity ) ceases to be a * subsidiary member of a * consolidated group at a time (the leaving time ); and (b) because subsection 701 ‑ 1(1) (the single entity rule) ceases to apply to the leaving entity at the leaving time, the asset or liability becomes the asset or liability of: (i) the leaving entity; or (ii) the * head company of the group; and (c) if subparagraph (b)(i) applies: (i) in the case of an asset—subsection 701 ‑ 55(5A) applies in relation to the asset at the leaving time because of section 701 ‑ 45; or (ii) in the case of a liability—subsection 715 ‑ 379(2) applies in relation to the liability at the leaving time; and (d) if subparagraph (b)(ii) applies: (i) in the case of an asset—subsection 701 ‑ 55(5A) applies in relation to the asset at the leaving time because of section 701 ‑ 20; and (ii) in the case of a liability—subsection 715 ‑ 379(2) applies in relation to the liability at the leaving time; and (e) the asset or liability is or is part of a * Division 230 financial arrangement. (2) If subparagraph (1)(b)(i) applies: (a) in the case of an asset—for the purposes of section 230 ‑ 60, assume that the leaving entity acquired the asset (as mentioned in subsection 701 ‑ 55(5A)) at the leaving time in return for the leaving entity starting to have an obligation to provide the payment mentioned in that subsection; and (b) in the case of a liability—for the purposes of section 230 ‑ 60, assume that the leaving entity started to have the liability at the leaving time in return for the leaving entity starting to have a right to receive the payment mentioned in subsection 715 ‑ 379(2). (3) If subparagraph (1)(b)(ii) applies: (a) in the case of an asset—for the purposes of section 230 ‑ 60, assume that the head company acquired the asset (as mentioned in subsection 701 ‑ 55(5A)) at the leaving time in return for the head company starting to have an obligation to provide the payment mentioned in that subsection; and (b) in the case of a liability—for the purposes of section 230 ‑ 60, assume that the head company started to have the liability at the leaving time in return for the head company starting to have a right to receive the payment mentioned in subsection 715 ‑ 379(2).

Amendment history: Inserted by No 14 of 2018, effective Sch 1: 1 Apr 2018 (s 2(1) items 2–4)

s 715-380 — Exit history rule not to affect certain matters related to Division 230 financial arrangements

Spreading fees gain or loss (1) Subsection (2) applies if: (a) an entity (the leaving entity ) ceases to be a * subsidiary member of a * consolidated group at a time (the leaving time ); and (b) but for the cessation of membership and section 701 ‑ 40 (the exit history rule), the * head company of the group would spread a fees gain or loss mentioned in section 230 ‑ 160 over a period that ended after the leaving time. (2) Despite section 701 ‑ 40 (the exit history rule), the * head company of the * consolidated group continues to spread the fees gain or loss over that period, in accordance with section 230 ‑ 160. Assessable income and deductions under section 701 ‑ 61 (3) Subsection (4) applies if: (a) an entity (the leaving entity ) ceases to be a * subsidiary member of a * consolidated group at a time (the leaving time ); and (b) but for the cessation of membership and section 701 ‑ 40 (the exit history rule): (i) an amount would be included in the assessable income of the * head company of the group under section 701 ‑ 61 for an income year ending after the leaving time; or (ii) the head company of the group would be entitled to a deduction under section 701 ‑ 61 for an income year ending after the leaving time. (4) Despite section 701 ‑ 40 (the exit history rule), the amount is included in the assessable income of the * head company for the income year, or the head company is entitled to the deduction for the income year.

Amendment history: Inserted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3)

s 715-385 — Exit history rule and elective methods applying to Division 230 financial arrangements

(1) Subsection (2) applies if: (a) an entity (the leaving entity ) ceases to be a * subsidiary member of a * consolidated group at a time (the leaving time ); and (b) the * head company of the group has a * Division 230 financial arrangement at the leaving time because the leaving entity is taken by subsection 701 ‑ 1(1) (the single entity rule) to be a part of the head company; and (c) after the leaving time, the leaving entity makes an election of a kind mentioned in section 230 ‑ 220 (fair value method), 230 ‑ 265 (foreign exchange retranslation method), 230 ‑ 325 (hedging method) or 230 ‑ 410 (reliance on financial reports method). (2) For the purposes of determining whether the election applies to the financial arrangement, disregard paragraphs 230 ‑ 220(1)(d), 230 ‑ 265(1)(d), 230 ‑ 325(a) and 230 ‑ 410(1)(b)).

Amendment history: Inserted by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3)

s 715-410 — Extension of single entity rule and entry history rule

(1) Subsection 701 ‑ 1(1) (Single entity rule) and section 701 ‑ 5 (Entry history rule) also have effect for all the purposes of Part 3 ‑ 95 (Value shifting). Note: One consequence of this for the operation of Division 727 (about indirect value shifting affecting interests in companies and trusts, and arising from non ‑ arm’s length dealings) is that economic benefits provided by or to a subsidiary member of a consolidated group are treated as provided by or to the head company of the group. As a result: • the head company is the only group member that can be a losing entity or gaining entity for an indirect value shift; and • economic benefits provided by one group member to another are treated as provided by the head company to itself, and so have no relevance to Division 727. Another consequence is that the head company is treated as owning all interests owned by group members in a losing entity or gaining entity that is not a group member. (2) This section is not intended to limit the effect that subsection 701 ‑ 1(1) and section 701 ‑ 5 have apart from 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)

s 715-450 — No reductions or other consequences for interests subject to loss cancellation under Subdivision 715 ‑ H

If section 715 ‑ 610 reduces a loss that would otherwise be * realised for income tax purposes by a * realisation event that happens to an * equity or loan interest in an entity: (a) the loss is not subject to reduction under Division 723 (Direct value shifting by creating right over non ‑ depreciating asset) or 727 (Indirect value shifting); and (b) the interest’s * adjustable value is not, and is taken never to have been, reduced under Division 725 because of a * direct value shift during the ownership period referred to in subsection 715 ‑ 610(2); and (c) the interest’s * adjustable value is not, and is taken never to have been, reduced under Division 727 because of an * indirect value shift during that period. Note: Section 715 ‑ 610 is about cancelling a loss on a realisation event for certain kinds of interests in a member of a consolidated 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) | 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 715-610 — 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 * consolidated group, 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 consolidated group; 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 consolidated group; 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 consolidated group; or (e) all of these conditions are satisfied at that time: (i) the realised interest was an equity or loan interest, an * indirect equity or loan interest or an external indirect equity or loan interest, in the * head company of a consolidated group; (ii) the owner was not a member of the group; (iii) the head company was an * eligible tier ‑ 1 company of a * top company. (3) An * equity or loan interest in an entity (the test entity ) is an external indirect equity or loan interest in a member of a * consolidated 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 member; or (b) the test entity owns an equity or loan interest that is an external indirect equity or loan interest in the 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 * consolidated 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 consolidated 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) | 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 715-615 — Exception for interests in entity leaving consolidated 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 * consolidated group; the first condition in section 715 ‑ 610 cannot be satisfied, because of that consolidated group, at a time when the first entity was a member of the group, unless the interest needed to be disregarded under section 703 ‑ 35 (about employee shares), or section 703 ‑ 37 (about ADI restructures), 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 * consolidated group; the first condition in section 715 ‑ 610 cannot be satisfied, because of that consolidated 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) | Amended by No 117 of 2007, effective 28 June 2007

s 715-620 — 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 * consolidated group (an excluded group ) because of which the first condition in section 715 ‑ 610 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 715-660 — Head company’s choice overriding entry history rule

Application (1) This section has effect if an entity becomes a * subsidiary member of a * consolidated group at a time (the joining time ) and either: (a) the question whether the entity had made a choice (however described) under a provision (the choice provision ) listed in the table was relevant to working out the entity’s liability (if any) for income tax, or the entity’s loss (if any) of a particular * sort, calculated by reference to an income year starting before the joining time; or (b) before the joining time, the entity made a choice that: (i) is described in paragraph (a); and (ii) would, if the entity had not become a subsidiary member of a consolidated group, have started to have effect for working out the entity’s liability (if any) for income tax, or the entity’s loss (if any) of a particular * sort, calculated by reference to the first income year starting after the joining time. List Item Provision Subject of provision 1 A provision of Part X of the Income Tax Assessment Act 1936 for an irrevocable declaration, election, choice or selection Attribution of income in respect of controlled foreign companies 2 A provision of Subdivision 420 ‑ D that provides for a choice Valuing * registered emissions units 3 Item 1 of the table in subsection 960 ‑ 60(1) Choosing to use an * applicable functional currency 3A section 230 ‑ 210, 230 ‑ 255, 230 ‑ 315 or 230 ‑ 395 Choice about treatment of gains and losses from * Division 230 financial arrangement 4 A provision that: (a) provides for a choice (however described); and (b) is a provision of regulations made for the purposes of this Act, other than this item; and (c) is prescribed by regulations made for the purposes of this item Choice about a matter described in the regulations Note: Declarations, elections and selections made under the choice provision by the entity are all examples of choices under that provision (even though the provision does not call them choices), because the entity has chosen to make them. Objects (2) The main objects of this section are: (a) to override section 701 ‑ 5 (Entry history rule) in relation to a choice (however described) by the entity under the choice provision or the absence of such a choice; and (b) to extend, in some cases, the time for the * head company of the * consolidated group to make a choice (however described) under the choice provision after the joining time; and (c) to modify, in some cases, the time at which such a choice by the head company starts to have effect. Overriding the entry history rule (3) For the head company core purposes set out in section 701 ‑ 1 (Single entity rule), ignore a choice (however described) made by the entity under the choice provision or the absence of such a choice. Extension of time for head company to make choice (4) If: (a) because of: (i) the fact that the entity became a * subsidiary member of the * consolidated group; and (ii) section 701 ‑ 1 (Single entity rule); the question whether the * head company of the group has made a choice (however described) under the choice provision becomes relevant for the head company core purposes set out in that section; and (b) there is a limit (outside this section) on the period within which the head company may make such a choice; the head company has until the later of these times to make such a choice: (c) the last time the head company may make the choice (apart from this subsection); (d) the end of 90 days after the Commissioner is given notice under Division 703 that the entity has become a * member of the group or, if the Commissioner allows a later time for the purposes of this paragraph, that later time. When head company’s choice starts to have effect (5) If the * head company of the * consolidated group makes a choice (however described) under the choice provision as a result of becoming able to make the choice because the entity became a * subsidiary member of the group at the joining time, the choice starts to have effect: (a) at the joining time; or (b) if the choice relates (explicitly or implicitly) to one or more whole income years—for the income year in which the joining time occurs. Note: Subsection (5) has effect whether or not subsection (4) contributed to the head company becoming able to make the choice. Relationship with other provisions (6) Section 701 ‑ 5 (Entry history rule) and the choice provision have effect subject to this section.

Amendment history: Inserted by No 23 of 2005, effective s. 4, Schedule 1 (items 2–8, 11, 13–19, 21–24, 26, 27, 29–32), Schedule 2 (items 1–11, 14), Schedule 3 (items 1–13, 75–102, 111(1)–(3)), Schedules 4–6, 8, 10 and Schedule 12 (items 2–6, 11(1)): Royal Assent Schedule 12 (item 1): 1 July 2000 | Amended by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3) | Amended by No 114 of 2010, effective Schedule 1 (items 40–86, 93(1), 95): Royal Assent | 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 715-665 — Head company’s choice to override inconsistency

Application (1) This section has effect if: (a) an entity (the joining entity ) becomes a * subsidiary member of a * consolidated group at a time (the joining time ); and (b) for each of the following entities, the question whether the entity had made a choice (however described) under a provision (the choice provision ) listed in the table was relevant to working out the entity’s liability (if any) for income tax, or the entity’s loss (if any) of a particular * sort, calculated by reference to an income year starting before the joining time: (i) the joining entity; (ii) another entity that was a * member of the group at the joining time; and (c) there was an inconsistency because, just before the joining time, such a choice had effect for one of the entities but not for the other. List Item Provision Subject of provision 1 Section 148 of the Income Tax Assessment Act 1936 Reinsurance with non ‑ residents 1A section 230 ‑ 210, 230 ‑ 255, 230 ‑ 315 or 230 ‑ 395 Choice about treatment of gains and losses from * Division 230 financial arrangement 2 Section 775 ‑ 80 Choosing not to have sections 775 ‑ 70 and 775 ‑ 75 apply to deal with * forex realisation gains and * forex realisation losses 3 A provision that: (a) provides for a choice (however described); and (b) is a provision of regulations made for the purposes of this Act, other than this item; and (c) is prescribed by regulations made for the purposes of this item Choice about a matter described in the regulations Note 1: The other entity mentioned in subparagraph (1)(b)(ii) may have become a member of the group either before or at the joining time. That other entity may be either another subsidiary member of the group or the head company of the group. Note 2: An election by an entity under section 148 of the Income Tax Assessment Act 1936 is an example of a choice under that provision (even though that section does not call the election a choice) because the entity has chosen to make the election. Object (2) The main objects of this section are: (a) to override the inconsistency; and (b) to displace section 701 ‑ 5 (Entry history rule), so far as it relates to the inconsistency; and (c) to allow the * head company of the * consolidated group to make a choice (however described) under the choice provision. Overriding the inconsistency (3) Neither of these things relating to an entity that becomes a * member of the * consolidated group at the joining time has effect for the head company core purposes set out in section 701 ‑ 1 (Single entity rule): (a) a choice (however described) by the entity having effect under the choice provision before that time; (b) the absence of such a choice. Note: This affects all entities that become members of the consolidated group at the joining time, including the head company if the joining time is the time at which the group comes into existence. (4) However, if the choice provision is section 148 of the Income Tax Assessment Act 1936 (Reinsurance with non ‑ residents): (a) subsection (3) of this section does not apply in relation to reinsurance under contracts made before the joining time (but does apply in relation to reinsurance under contracts made at or after that time); and (b) that section applies for the head company core purposes in relation to reinsurance under a contract made before the joining time by an entity (the contracting party ) that became a * member of the * consolidated group at or before the joining time: (i) as if the * head company of the consolidated group had made an election under that section, if the contracting party had made such an election that was relevant to working out the party’s liability (if any) for income tax, or the party’s * tax loss (if any), for an income year in connection with the contract; or (ii) as if the head company had not made such an election, if the contracting party had not made such an election that was relevant to working out the party’s liability (if any) for income tax, or the party’s tax loss (if any), for an income year in connection with the contract. Choice replacing inconsistency (5) If: (a) the question whether the * head company of the * consolidated group has made a choice (however described) under the choice provision is relevant for the head company core purposes set out in section 701 ‑ 1 (Single entity rule); and (b) there is a limit (outside this section) on the period within which the head company may make such a choice; the head company has until the later of these times to make such a choice: (c) the last time the head company may make the choice (apart from this subsection); (d) the end of 90 days after the Commissioner is given notice under Division 703 that the joining entity has become a * member of the group or, if the Commissioner allows a later time for the purposes of this paragraph, that later time. Note: If the joining time is when the consolidated group is formed, the Commissioner should be given notice under Division 703 that the joining entity has become a member of the group when the approved form of the choice to form the group is given to the Commissioner. When head company’s choice starts to have effect (6) If the * head company of the * consolidated group makes a choice (however described) under the choice provision as a result of becoming able to make the choice because the joining entity became a * member of the group, the choice starts to have effect: (a) at the joining time; or (b) if the choice relates (explicitly or implicitly) to one or more whole income years—for the income year in which the joining time occurs. (7) However, if: (a) the * head company of the * consolidated group makes a choice as described in subsection (6); and (b) the choice is an election under section 148 of the Income Tax Assessment Act 1936 (Reinsurance with non ‑ residents); the election has effect only for the purposes of that section applying in relation to reinsurance under contracts made after the joining time and in an income year for which the election applies under that section. Note: Subsection (4) explains how section 148 of the Income Tax Assessment Act 1936 applies in relation to reinsurance under contracts made before the joining time. Relationship with other provisions (8) Section 701 ‑ 5 (Entry history rule) and the choice provision have effect subject to this section.

Amendment history: Inserted by No 23 of 2005, effective s. 4, Schedule 1 (items 2–8, 11, 13–19, 21–24, 26, 27, 29–32), Schedule 2 (items 1–11, 14), Schedule 3 (items 1–13, 75–102, 111(1)–(3)), Schedules 4–6, 8, 10 and Schedule 12 (items 2–6, 11(1)): Royal Assent Schedule 12 (item 1): 1 July 2000 | Amended by No 15 of 2009, effective Sch 1 (items 1–30, 52–97, 102–105): 26 Mar 2009 (s 2(1) item 2) Sch 1 (items 106–112, 114): 17 Dec 2003 (s 2(1) item 3)

s 715-670 — Ongoing effect of choices made by entities before joining group

(1) This section has effect if the question whether the * head company of a * consolidated group has made a choice (however described) under a provision listed in the table is relevant for the head company core purposes set out in section 701 ‑ 1 (Single entity rule) because of something happening in relation to a thing: (a) that is an asset, right, liability or obligation of the head company; and (b) that the head company started to have, at the time (the joining time ) an entity (the joining entity ) became a * subsidiary member of the group, because of that section and the fact that (ignoring that section) the entity had the thing at the joining time. List Item Provision Subject of provision 1 Section 775 ‑ 150 Choice to apply rules about disregarding certain * forex realisation gains and * forex realisation losses (2) The * head company is taken to have made such a choice if the joining entity had one in effect before the joining time. (3) The * head company is taken not to have made the choice if the joining entity did not have one in effect before the joining time.

Amendment history: Inserted by No 23 of 2005, effective s. 4, Schedule 1 (items 2–8, 11, 13–19, 21–24, 26, 27, 29–32), Schedule 2 (items 1–11, 14), Schedule 3 (items 1–13, 75–102, 111(1)–(3)), Schedules 4–6, 8, 10 and Schedule 12 (items 2–6, 11(1)): Royal Assent Schedule 12 (item 1): 1 July 2000

s 715-675 — Head company adopting choice with ongoing effect

(1) This section has effect, despite section 715 ‑ 670, if: (a) an entity that becomes a * member of a * consolidated group had a choice (however described) in effect under a provision (the choice provision ) listed in that section before becoming a member of the group; and (b) the time at which the entity becomes a member of the group is the first time at which an entity that had a choice (however described) in effect under the choice provision before becoming a member of the group became a member of the group; and (c) the * head company of the group chooses in writing, before: (i) the end of 90 days after the Commissioner is given notice under Division 703 that the entity has become a member of the group; or (ii) a later time allowed by the Commissioner; to be treated as if the head company had made a choice under the choice provision. (2) The * head company is taken to have made a choice under the choice provision for these purposes: (a) the head company core purposes set out in section 701 ‑ 1 (Single entity rule); (b) the purposes of the application of section 715 ‑ 670 and paragraph (1)(a) in relation to another * consolidated group of which the company later becomes a * subsidiary member.

Amendment history: Inserted by No 23 of 2005, effective s. 4, Schedule 1 (items 2–8, 11, 13–19, 21–24, 26, 27, 29–32), Schedule 2 (items 1–11, 14), Schedule 3 (items 1–13, 75–102, 111(1)–(3)), Schedules 4–6, 8, 10 and Schedule 12 (items 2–6, 11(1)): Royal Assent Schedule 12 (item 1): 1 July 2000

s 715-700 — Choices leaving entity can make ignoring exit history rule

Application (1) This section has effect if: (a) an entity ceases to be a * subsidiary member of a * consolidated group at a time (the leaving time ); and (b) the question whether the * head company of the group had made a choice (however described) under a provision (the choice provision ) listed in the table in subsection 715 ‑ 660(1) was relevant to working out that company’s liability (if any) for income tax, or the entity’s loss (if any) of a particular * sort, calculated by reference to an income year starting before the leaving time. Note: Declarations, elections and selections made under the choice provision at the option of a company are all examples of choices under that provision (even though it does not call them choices) because the company has chosen to make them. Objects (2) The main objects of this section are: (a) to override section 701 ‑ 40 (Exit history rule) and let the entity make a choice (however described) under the choice provision with effect after the leaving time; and (b) to extend, in some cases, the time for the entity to make such a choice after the leaving time; and (c) to modify, in some cases, the rules about when such a choice by the entity starts to have effect. Overriding the exit history rule (3) For the entity core purposes set out in section 701 ‑ 1 (Single entity rule) relating to income years ending after the leaving time, ignore a choice (however described) made by the * head company of the * consolidated group under the choice provision or the absence of such a choice. Fresh choice by the entity (4) The entity may make a choice (however described) under the provision if the question whether the entity has made such a choice is relevant to working out the entity’s liability (if any) for income tax, or loss (if any) of a particular * sort, calculated by reference to an income year ending after the leaving time. Extension of time for fresh choice by the entity (5) If there is a time limit (apart from this subsection) on the entity making such a choice, the entity has until the later of these times to make the choice: (a) the last time it may make the choice under the provision (apart from this section); (b) the end of 90 days after the leaving time or, if the Commissioner allows a later time for the purposes of this paragraph, that later time. Start of effect of choice (6) If the entity makes a choice because of this section, the choice starts to have effect: (a) at the leaving time; or (b) if the choice relates (explicitly or implicitly) to one or more whole income years—for the income year in which the leaving time occurs. Relationship with other provisions (7) Section 701 ‑ 40 (Exit history rule) and the choice provision have effect subject to this section.

Amendment history: Inserted by No 23 of 2005, effective s. 4, Schedule 1 (items 2–8, 11, 13–19, 21–24, 26, 27, 29–32), Schedule 2 (items 1–11, 14), Schedule 3 (items 1–13, 75–102, 111(1)–(3)), Schedules 4–6, 8, 10 and Schedule 12 (items 2–6, 11(1)): Royal Assent Schedule 12 (item 1): 1 July 2000

s 715-705 — Choices leaving entity can make ignoring exit history rule to overcome inconsistencies

Application (1) This section has effect if an entity ceases to be a * subsidiary member of a * consolidated group at a time (the leaving time ) and there is an inconsistency because either: (a) both of these conditions are met: (i) a choice (however described) under a provision (the choice provision ) listed in the table in subsection 715 ‑ 665(1) by the entity had effect just before the entity became a * member of the group; (ii) there was not such a choice by the * head company of the group having effect just before the leaving time; or (b) both of these conditions are met: (i) there was not a choice (however described) under the choice provision by the entity having effect just before the entity became a member of the group; (ii) such a choice by the head company had effect just before the leaving time. Note: An election by the entity or head company under the choice provision is an example of a choice under that provision (even though the provision does not call the election a choice) because the entity or company has chosen to make the election. Object (2) The main objects of this section are: (a) to displace section 701 ‑ 40 (Exit history rule), so far as it relates to the inconsistency; and (b) to allow the entity to make a choice (however described) under the choice provision with effect after the leaving time. Displacing the exit history rule (3) For the entity core purposes set out in section 701 ‑ 1 (Single entity rule) relating to income years ending after the leaving time, ignore a choice (however described) made by the * head company of the * consolidated group under the choice provision or the absence of such a choice. (4) However, if the choice provision is section 148 of the Income Tax Assessment Act 1936 (Reinsurance with non ‑ residents): (a) subsection (3) of this section does not apply in relation to reinsurance under contracts made before the leaving time (but does apply in relation to reinsurance under contracts made at or after that time); and (b) that section applies, for the entity core purposes relating to income years ending after the leaving time, in relation to reinsurance under a contract made before the leaving time: (i) as if the entity had made an election under that section, if the * head company of the * consolidated group made, or was treated as having made, such an election that was relevant to working out that company’s liability (if any) for income tax, or that company’s * tax loss (if any), for an income year in connection with the contract; or (ii) as if the entity had not made such an election, if the head company had not made, and was not treated as having made, such an election that was relevant to working out that company’s liability (if any) for income tax, or that company’s tax loss (if any), for an income year in connection with the contract. Note: In some cases, subsection 715 ‑ 665(4) treats the head company of a consolidated group as having made an election under section 148 of the Income Tax Assessment Act 1936 in relation to reinsurance under contracts made before an entity becomes a member of the group. Fresh choice by the entity (5) The entity may make a choice (however described) under the choice provision if the question whether the entity has made such a choice is relevant to working out the entity’s liability (if any) for income tax, or loss (if any) of a particular * sort, calculated by reference to an income year ending after the leaving time. Extension of time for fresh choice by the entity (6) If there is a time limit (apart from this subsection) on the entity making such a choice, the entity has until the later of these times to make the choice: (a) the last time it may make the choice under the choice provision (apart from this section); (b) the end of 90 days after the leaving time or, if the Commissioner allows a later time for the purposes of this paragraph, that later time. Start of effect of choice (7) If the entity makes a choice because of this section, the choice starts to have effect: (a) at the leaving time; or (b) if the choice relates (explicitly or implicitly) to one or more whole income years—for the income year in which the leaving time occurs. (8) However, if: (a) the entity makes a choice because of this section; and (b) the choice is an election under section 148 of the Income Tax Assessment Act 1936 (Reinsurance with non ‑ residents); the election has effect only for the purposes of that section applying in relation to reinsurance under contracts made at or after the leaving time and in an income year for which the election applies under that section. Note: Subsection (4) explains how section 148 of the Income Tax Assessment Act 1936 applies in relation to reinsurance under contracts made before the joining time. Relationship with other provisions (9) Section 701 ‑ 40 (Exit history rule) and the choice provision have effect subject to this section.

Amendment history: Inserted by No 23 of 2005, effective s. 4, Schedule 1 (items 2–8, 11, 13–19, 21–24, 26, 27, 29–32), Schedule 2 (items 1–11, 14), Schedule 3 (items 1–13, 75–102, 111(1)–(3)), Schedules 4–6, 8, 10 and Schedule 12 (items 2–6, 11(1)): Royal Assent Schedule 12 (item 1): 1 July 2000

s 715-875 — Extension of single entity rule and entry history rule

(1) Subsection 701 ‑ 1(1) (Single entity rule) and section 701 ‑ 5 (Entry history rule) also have effect for all the purposes of Subdivision 802 ‑ A (about conduit foreign income). (2) This section is not intended to limit the effect that subsection 701 ‑ 1(1) and section 701 ‑ 5 have apart from this section.

Amendment history: Inserted 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

s 715-880 — No CFI for leaving entity

Despite section 701 ‑ 40 (the exit history rule), an entity that ceases to be a * subsidiary member of a * consolidated group at a time has no * conduit foreign income at that time.

Amendment history: Inserted 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

s 715-900 — Transition time taken to be just before joining time

(1) This section has effect if: (a) an entity becomes a * subsidiary member of a * consolidated group at a time (the joining time ); and (b) the entity’s * ordinary income and * statutory income were not (to any extent) assessable income just before the joining time. (2) Division 57 in Schedule 2D to the Income Tax Assessment Act 1936 and Division 58 of this Act have effect as if the entity’s * ordinary income or * statutory income had become to some extent assessable income just before the joining time. Note 1: Those Divisions deal with entities whose ordinary income and statutory income were previously exempt from income tax. Note 2: The operation of Division 58 just before the joining time can affect the basis on which the tax cost is set for a depreciating asset that becomes an asset of the head company of the consolidated group at the joining time because of section 701 ‑ 1 (the single entity rule). That Division provides the basis for working out under Division 40 the asset’s adjustable value. This is the entity’s terminating value for the asset, which in turn can affect the tax cost setting amount for the asset under sections 705 ‑ 40, 705 ‑ 45 and 705 ‑ 47.

Amendment history: Inserted 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 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 715-910 — Effect on restructures—original entity becomes a subsidiary member

(1) This section applies if: (a) as a result of an * arrangement to which section 124 ‑ 784A applies, an original entity (within the meaning of that section) becomes a * subsidiary member of a * consolidated group; and (b) section 715 ‑ 920 does not apply. Note 1: Section 715 ‑ 920 applies if the original entity was the head company of another consolidated group before the arrangement was completed. Note 2: Sections 124 ‑ 784A and 124 ‑ 784B apply to arrangements for restructures. (2) For the purposes of section 124 ‑ 784B: (a) the completion time (within the meaning of that section) for the * arrangement is taken to be the time the original entity becomes a member of the group; and (b) disregard Division 701 (Core rules) in relation to the original entity becoming a member of the group. (3) The * head company of the group may choose for: (a) section 701 ‑ 10 (cost to head company of assets of joining entity); and (b) subsection 701 ‑ 35(4) (setting value of trading stock at tax ‑ neutral amount); and (c) subsection 701 ‑ 35(5) (setting value of registered emissions unit at tax ‑ neutral amount); not to apply to the original entity’s assets in respect of the original entity becoming a * subsidiary member of the group. Note: This subsection does not affect the application of subsection 701 ‑ 1(1) (the single entity rule).

Amendment history: Inserted by No 14 of 2009, effective Schedule 1, Schedule 4 (items 11–34, 52) and Schedule 5 (items 7–13): Royal Assent Schedule 5 (items 2, 3, 14): 29 Jan 2009 Schedule 5 (items 5, 6): 1 July 2011 | 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 715-915 — Effect on restructures—original entity is a head company

If: (a) section 124 ‑ 784A applies in relation to an * arrangement; and (b) the original entity (within the meaning of that section) for the arrangement is the * head company of a * consolidated group just before the arrangement was completed; and (c) section 715 ‑ 920 does not apply; then, for the purposes of section 124 ‑ 784B, subsection 701 ‑ 1(1) (the single entity rule) and section 701 ‑ 5 (the entry history rule) apply in respect of the group. Note 1: This section does not otherwise affect the application of subsection 701 ‑ 1(1) or section 701 ‑ 5. Note 2: Sections 124 ‑ 784A and 124 ‑ 784B apply to arrangements for restructures.

Amendment history: Inserted by No 14 of 2009, effective Schedule 1, Schedule 4 (items 11–34, 52) and Schedule 5 (items 7–13): Royal Assent Schedule 5 (items 2, 3, 14): 29 Jan 2009 Schedule 5 (items 5, 6): 1 July 2011

s 715-920 — Effect on restructures—original entity is a head company that becomes a subsidiary member of another group

(1) This section applies if: (a) section 124 ‑ 784A applies in relation to an * arrangement; and (b) the original entity (within the meaning of that section) for the arrangement is the * head company of a * consolidated group (the acquired group ) just before the arrangement was completed; and (c) as a result of the arrangement: (i) the original entity; and (ii) the * subsidiary members of the acquired group just before the arrangement was completed; become subsidiary members of another consolidated group. Note: Sections 124 ‑ 784A and 124 ‑ 784B apply to arrangements for restructures. (2) For the purposes of section 124 ‑ 784B: (a) the original entity is taken to be the * head company of the acquired group at the completion time (within the meaning of that section) for the * arrangement; and (b) the operation of this Part for the head company core purposes (mentioned in subsection 701 ‑ 1(2)) in relation to: (i) the original entity; and (ii) the entities that were * subsidiary members of the acquired group just before the arrangement was completed; continue to have effect at the completion time for the arrangement; and (c) the completion time for the arrangement is taken to be the time the original entity becomes a member of the other group; and (d) disregard Division 701 (Core rules) in relation to the original entity becoming a member of the other group. Note: Paragraph (b) means that, for the purposes of section 124 ‑ 784B, the subsidiary members of the acquired group are treated as part of the original entity. (3) The * head company of the other group may choose for: (a) section 701 ‑ 10 (cost to head company of assets of joining entity); and (b) subsection 701 ‑ 35(4) (setting value of trading stock at tax ‑ neutral amount); and (c) subsection 701 ‑ 35(5) (setting value of registered emissions unit at tax ‑ neutral amount); not to apply to the original entity’s assets in respect of the original entity becoming a * subsidiary member of the other group. Note: This subsection does not affect the application of subsection 701 ‑ 1(1) (the single entity rule).

Amendment history: Inserted by No 14 of 2009, effective Schedule 1, Schedule 4 (items 11–34, 52) and Schedule 5 (items 7–13): Royal Assent Schedule 5 (items 2, 3, 14): 29 Jan 2009 Schedule 5 (items 5, 6): 1 July 2011 | 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 715-925 — Effect on restructures—original entity ceases being a subsidiary member

If, as a result of an * arrangement to which section 124 ‑ 784A applies, an original entity (within the meaning of that section): (a) ceases to be a * subsidiary member of a * consolidated group after the completion time (within the meaning of that section) for the arrangement; and (b) does not become a member of another consolidated group; then, for the purposes of section 124 ‑ 784B, the completion time for the arrangement is taken to happen at the time of the cessation. Note: Sections 124 ‑ 784A and 124 ‑ 784B apply to arrangements for restructures.

Amendment history: Inserted by No 14 of 2009, effective Schedule 1, Schedule 4 (items 11–34, 52) and Schedule 5 (items 7–13): Royal Assent Schedule 5 (items 2, 3, 14): 29 Jan 2009 Schedule 5 (items 5, 6): 1 July 2011

s 716-1 — What this Division is about

Some items of assessable income, and some deductions, are in effect spread over 2 or more income years. This Division apportions the assessable income or deduction for each of those income years among periods within the income year when an entity is, or is not, a subsidiary member of a consolidated group. This Division also apportions in a similar way some items of assessable income, and some deductions, for a single income year. Table of sections Operative provisions 716 ‑ 15 Assessable income spread over 2 or more income years 716 ‑ 25 Deductions spread over 2 or more income years 716 ‑ 70 Capital expenditure that is fully deductible in one income year Assessable income and deductions arising from share of net income of a partnership or trust, or from share of partnership loss 716 ‑ 75 Application 716 ‑ 80 Head company’s assessable income and deductions 716 ‑ 85 Entity’s assessable income and deductions for a non ‑ membership period 716 ‑ 90 Entity’s share of assessable income or deductions of partnership or trust 716 ‑ 95 Special rule if not all partnership or trust’s assessable income or deductions taken into account in working out amount 716 ‑ 100 Spreading period

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 716-15 — Assessable income spread over 2 or more income years

(1) This section applies if, apart from this Part, a provision of this Act would spread an amount (the original amount ) over 2 or more income years (whether or not because of a choice) by including part of the original amount in the same entity’s assessable income for each of those income years. Head company’s assessable income (2) If: (a) for some but not all of an income year, an entity is a * subsidiary member of a * consolidated group; and (b) a part of the original amount: (i) would have been included in the assessable income of the * head company of the group for that income year if the entity had been a subsidiary member of the group throughout that income year; but (ii) would have been included in the entity’s assessable income for that income year if throughout that income year the entity had not been a subsidiary member of any * consolidated group; the head company’s assessable income for that income year includes a proportion of that part. Note 1: Examples of when paragraph (2)(b) could be satisfied are: • the head company is the entity referred to in subsection (1), but its connection with the original amount passes to the entity when the entity ceases to be a subsidiary member of the group (see section 701 ‑ 40 (Exit history rule)); • the entity is the entity referred to in subsection (1) but joins a consolidated group part way through the income year, so that its connection with the original amount passes to the head company of the group (see section 701 ‑ 5 (Entry history rule)). Note 2: If the entity is a subsidiary member of the group throughout the income year, the part of the original amount will be included in the head company’s assessable income for the income year, either: • because the head company is the entity referred to in subsection (1); or • because of section 701 ‑ 1 (Single entity rule); or • because of section 701 ‑ 5 (Entry history rule). (3) The proportion is worked out by multiplying that part of the original amount by: • the number of days that are in both the income year and the * spreading period, and on which the entity was a * subsidiary member of the group; divided by: • the number of days that are in both the income year and the spreading period. Entity’s assessable income for a non ‑ membership period (4) If: (a) for some but not all of an income year, an entity is a * subsidiary member of a * consolidated group; and (b) a part of the original amount would have been included in the entity’s assessable income for that income year if throughout that income year the entity had not been a subsidiary member of any * consolidated group; the assessable income of the entity for a part of the income year that is a non ‑ membership period for the purposes of section 701 ‑ 30 includes a proportion of that part. Note 1: Section 701 ‑ 30 is about working out an entity’s tax position for a period when it is not a subsidiary member of any consolidated group. Note 2: If throughout the income year the entity is not a subsidiary member of any consolidated group, this section does not affect the part of the original amount that is assessable income of the entity for the income year either: • because the entity is the entity referred to in subsection (1); or • because of section 701 ‑ 40 (Exit history rule). (5) The proportion is worked out by multiplying that part of the original amount by: • the number of days that are in both the non ‑ membership period and the * spreading period; divided by: • the number of days that are in both the income year and the spreading period. Spreading period (6) The spreading period for the original amount is the period by reference to which the respective parts of the original amount that, apart from this Part, would be included in an entity’s assessable income for the 2 or more income years are worked out.

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 716-25 — Deductions spread over 2 or more income years

(1) This section applies if, apart from this Part, a provision of this Act would spread an amount (the original amount ) over 2 or more income years (whether or not because of a choice) by entitling the same entity to deduct part of the original amount for each of those income years. (2) However, this section does not apply if the deductions would be for the decline in value of a * depreciating asset. Note: Such deductions arise under Division 40 (Capital allowances) and Division 328 (Small business entities). Head company’s deduction (3) If for some but not all of an income year an entity is a * subsidiary member of a * consolidated group, and: (a) the * head company of the group could have deducted for that income year a part of the original amount if the entity had been a subsidiary member of the group throughout that income year; but (b) the entity could have deducted that part for that income year if throughout that income year the entity had not been a subsidiary member of any * consolidated group; the head company can deduct for that income year a proportion of that part. Note 1: Examples of when paragraphs (3)(a) and (b) could be satisfied are set out in note 1 to subsection 716 ‑ 15(2). Note 2: If the entity is a subsidiary member of the group throughout the income year, the head company can deduct that part for the income year, either: • because the head company is the entity referred to in subsection (1) of this section; or • because of section 701 ‑ 1 (Single entity rule); or • because of section 701 ‑ 5 (Entry history rule). (4) The proportion is worked out by multiplying that part of the original amount by: • the number of days that are in both the income year and the * spreading period, and on which the entity was a * subsidiary member of the group; divided by: • the number of days that are in both the income year and the spreading period. Entity’s deduction for a non ‑ membership period (5) If: (a) for some but not all of an income year, an entity is a * subsidiary member of a * consolidated group; and (b) the entity could have deducted for that income year a part of the original amount if throughout that income year the entity had not been a subsidiary member of any * consolidated group; the entity can deduct a proportion of that part for a part of the income year that is a non ‑ membership period for the purposes of section 701 ‑ 30. Note 1: Section 701 ‑ 30 is about working out an entity’s tax position for a period when it is not a subsidiary member of any consolidated group. Note 2: If throughout the income year the entity is not a subsidiary member of any consolidated group or MEC group, this section does not affect the part of the original amount that the entity can deduct for the income year either: • because the entity is the entity referred to in subsection (1); or • because of section 701 ‑ 40 (Exit history rule). (6) The proportion is worked out by multiplying that part of the original amount by: • the number of days that are in both the non ‑ membership period and the * spreading period; divided by: • the number of days that are in both the income year and the spreading period. Spreading period (7) The spreading period for the original amount is the period by reference to which the respective parts of the original amount that, apart from this Part, an entity could deduct for the 2 or more income years are worked out. Note: For example, under section 82KZMD of the Income Tax Assessment Act 1936 an item of expenditure on something is spread over the period over which that thing is to be provided, which is called the eligible service period. Deductions for the item for a sequence of income years are worked out by reference to how much of that period falls within each of those income years.

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 80 of 2007, effective 21 June 2007

s 716-70 — Capital expenditure that is fully deductible in one income year

(1) This section applies if, apart from this Part, an entity could deduct for a single income year the whole of an amount (the original amount ) of capital expenditure by the entity. (2) If for some but not all of an income year an entity is a * subsidiary member of a * consolidated group or * MEC group, and: (a) the * head company of the group could have deducted the original amount for that income year if the entity had been a subsidiary member of the group throughout that income year; but (b) the entity could have deducted the original amount for that income year if throughout that income year the entity had not been a subsidiary member of any consolidated group or MEC group; the head company can deduct for that income year a proportion of the original amount. Note 1: Examples of when paragraphs (2)(a) and (b) could be satisfied are set out in note 1 to subsection 716 ‑ 15(2). Note 2: If the entity is a subsidiary member of the group throughout the income year, the head company can deduct the original amount for the income year, either: • because the head company is the entity referred to in subsection (1) of this section; or • because of section 701 ‑ 1 (Single entity rule); or • because of section 701 ‑ 5 (Entry history rule). (3) The proportion is worked out by multiplying the original amount by: • the number of days that are in the * spreading period, and on which the entity was a * subsidiary member of the group; divided by: • the number of days that are in the spreading period. Entity’s deduction for a non ‑ membership period (4) If: (a) for some but not all of an income year, an entity is a * subsidiary member of a * consolidated group or * MEC group; and (b) the entity could have deducted the original amount for that income year if throughout that income year the entity had not been a subsidiary member of any consolidated group or MEC group; the entity can deduct a proportion of the original amount for a part of the income year that is a non ‑ membership period for the purposes of section 701 ‑ 30. Note 1: Section 701 ‑ 30 is about working out an entity’s tax position for a period when it is not a subsidiary member of any consolidated group. Note 2: If throughout the income year the entity is not a subsidiary member of any consolidated group or MEC group, this section does not affect the entity’s ability to deduct the original amount for the income year either: • because the entity is the entity referred to in subsection (1); or • because of section 701 ‑ 40 (Exit history rule). (5) The proportion is worked out by multiplying the original amount by: • the number of days that are in both the non ‑ membership period and the * spreading period; divided by: • the number of days that are in the spreading period. Spreading period (6) The spreading period for the original amount: (a) starts when, apart from this Part, an entity would become entitled to deduct the amount for an income year; and (b) ends at the end of the income year.

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 716-75 — Application

Sections 716 ‑ 80 to 716 ‑ 100 apply if, apart from this Part: (a) an amount would be included in an entity’s assessable income for an income year under section 92 (about income and deductions of partner) of the Income Tax Assessment Act 1936 in respect of a partnership; or (b) an entity could deduct an amount for an income year under section 92 of that Act in respect of a partnership; or (c) an amount would be included in an entity’s assessable income for an income year under section 97 (Beneficiary of a trust estate who is not under a legal disability) of that Act in respect of a trust; or (d) an amount would be included in an entity’s assessable income for an income year under section 98A (Non ‑ resident beneficiaries assessable in respect of certain income) of that Act in respect of a trust.

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 716-80 — Head company’s assessable income and deductions

(1) If for some but not all of the income year the entity is a * subsidiary member of a * consolidated group or * MEC group: (a) the assessable income for that income year of the head company of the group includes the entity’s share (worked out under section 716 ‑ 90) of each of these: (i) the total assessable income of the partnership or trust for the income year so far as it is reasonably attributable to a period, during the income year, throughout which the entity was a * subsidiary member of the group but the partnership or trust was not ; (ii) a proportion (worked under subsection (2) of this section) of the total assessable income of the partnership or trust for the income year so far as it is not reasonably attributable to a particular period within the income year; and (b) the head company of the group can deduct for that income year the entity’s share (worked out under section 716 ‑ 90) of each of these: (i) the total deductions of the partnership or trust for the income year so far as they are reasonably attributable to a period covered by subparagraph (a)(i) of this subsection; (ii) a proportion (worked under subsection (2) of this section) of the total deductions of the partnership or trust for the income year so far as they are not reasonably attributable to a particular period within the income year. Note 1: If the entity is a subsidiary member of the group throughout the income year, the amount referred to in section 716 ‑ 75 will be included in the head company’s assessable income, or the head company can deduct that amount, for the income year because of section 701 ‑ 1 (Single entity rule). Note 2: While the entity, and the partnership or trust, are both subsidiary members of the group, section 701 ‑ 1 (Single entity rule) attributes to the head company all assessable income and deductions giving rise to the amount referred to in section 716 ‑ 75. (2) The proportion is worked out by multiplying the amount concerned by: • the number of days that are in the * spreading period, and on which the entity was a * subsidiary member of the group but the partnership or trust was not ; divided by: • the number of days that are in the spreading period.

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 716-85 — Entity’s assessable income and deductions for a non ‑ membership period

(1) The assessable income of the entity for a part of the income year that is a non ‑ membership period for the purposes of section 701 ‑ 30 includes the entity’s share (worked out under section 716 ‑ 90) of each of these: (a) the total assessable income of the partnership or trust for the income year so far as it is reasonably attributable to the non ‑ membership period; (b) a proportion (worked under subsection (3) of this section) of the total assessable income of the partnership or trust for the income year so far as it is not reasonably attributable to a particular period within the income year. Note 1: Section 701 ‑ 30 is about working out an entity’s tax position for a period when it is not a subsidiary member of any consolidated group. Note 2: If throughout the income year the entity is not a subsidiary member of any consolidated group or MEC group, this section does not affect the amount referred to in section 716 ‑ 75 being assessable income of the entity for the income year. (2) For a part of the income year that is a non ‑ membership period for the purposes of section 701 ‑ 30, the entity can deduct the entity’s share (worked out under section 716 ‑ 90) of each of these: (a) the total deductions of the partnership or trust for the income year so far as they are reasonably attributable to the non ‑ membership period; (b) a proportion (worked under subsection (3) of this section) of the total deductions of the partnership or trust for the income year so far as they are not reasonably attributable to a particular period within the income year. Note: If throughout the income year the entity is not a subsidiary member of any consolidated group or MEC group, this section does not affect the entity’s ability to deduct for the income year the amount referred to in section 716 ‑ 75. (3) The proportion is worked out by multiplying the amount concerned by: • the number of days that are in both the non ‑ membership period and the * spreading period; divided by: • the number of days that are in the spreading period.

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 716-90 — Entity’s share of assessable income or deductions of partnership or trust

(1) If paragraph 716 ‑ 75(a) or (b) applies, the entity’s share is worked out by dividing: • the entity’s individual interest as a partner in the net income of the partnership or in the partnership loss; by: • the amount of that net income or partnership loss; and expressing the result as a percentage. (2) If paragraph 716 ‑ 75(c) or (d) applies, the entity’s share is worked out by dividing: • the share of the income of the trust to which the entity is presently entitled; by: • the amount of that income; and expressing the result as a percentage.

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 716-95 — Special rule if not all partnership or trust’s assessable income or deductions taken into account in working out amount

(1) To the extent that the assessable income of the partnership or trust for the income year was not taken into account in working out the amount referred to in section 716 ‑ 75, it is disregarded in applying paragraph 716 ‑ 80(1)(a) or subsection 716 ‑ 85(1). Note: For example, if a trust’s net income for an income year must be worked out under section 268 ‑ 45 in Schedule 2F to the Income Tax Assessment Act 1936 , the trust’s assessable income attributed to a period (in the income year) for which it has a notional loss under section 268 ‑ 30 of that Act is not taken into account. (2) To the extent that the deductions of the partnership or trust for the income year were not taken into account in working out the amount referred to in section 716 ‑ 75, they are disregarded in applying paragraph 716 ‑ 80(1)(b) or subsection 716 ‑ 85(2). Note: For example, in the case described in the note to subsection (1) of this section, the trust’s deductions attributed to that period are not taken into account in working out the trust’s net income for the income year.

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 716-100 — Spreading period

The spreading period for the amount referred to in section 716 ‑ 75 is made up of each period: (a) that is all or part of the income year; and (b) throughout which the entity is a partner in the partnership or a beneficiary of the trust, as appropriate.

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 716-300 — Prime cost method of working out decline in value

(1) This section has effect if: (a) an entity (the joining entity ) becomes a * subsidiary member of a * consolidated group at a time (the joining time ); and (b) because of subsection 40 ‑ 80(1), the joining entity could (or did) deduct for a period before the joining time the * cost of a * depreciating asset that became an asset of the * head company of the group at the joining time because section 701 ‑ 1 (Single entity rule) applied to the joining entity; and (c) the joining entity could not deduct an amount under Subdivision 40 ‑ B (except because of subsection 40 ‑ 80(1)) for the income year that includes the joining time for that cost. Note: Subdivision 40 ‑ B allows deductions for the decline in value of depreciating assets. Subsection 40 ‑ 80(1), which is in that Subdivision, provides that the decline in value of certain assets used for exploration and prospecting equals their cost. (2) Subsection 701 ‑ 55(2) has effect as if the * prime cost method for working out the decline in value of the * depreciating asset applied just before the joining time. Note: This may affect both the method of working out the decline in value of the asset and the asset’s effective life.

Amendment history: Inserted by No 23 of 2005, effective s. 4, Schedule 1 (items 2–8, 11, 13–19, 21–24, 26, 27, 29–32), Schedule 2 (items 1–11, 14), Schedule 3 (items 1–13, 75–102, 111(1)–(3)), Schedules 4–6, 8, 10 and Schedule 12 (items 2–6, 11(1)): Royal Assent Schedule 12 (item 1): 1 July 2000 | Amended by No 84 of 2013, effective s 4, Sch 1 (items 2–9, 19–23), Sch 2, Sch 3, Sch 6 and Sch 8 (items 27–32): 28 June 2013 (s 2(1) items 1, 2, 4) | 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 716-330 — Head company’s deductions for decline in value of assets in joining entity’s low ‑ value pool

(1) This section modifies the operation of sections 40 ‑ 430, 40 ‑ 435, 40 ‑ 440, 40 ‑ 445, 701 ‑ 10 and 701 ‑ 60 and Division 705 for the head company core purposes mentioned in section 701 ‑ 1 if: (a) an entity (the joining entity ) becomes a * subsidiary member of a * consolidated group at a time (the joining time ); and (b) there are one or more * depreciating assets (the previous pool assets ) that: (i) were allocated to the joining entity’s low ‑ value pool; and (ii) become assets of the * head company of the group at the joining time because section 701 ‑ 1 applies to the joining entity; and (c) none of the previous pool assets was an asset to which Division 58 applied to affect the joining entity’s deductions relating to the asset. Note 1: Sections 40 ‑ 430, 40 ‑ 435 and 40 ‑ 440 are relevant to allocating depreciating assets to a low ‑ value pool and to working out the decline in value of assets allocated to a low ‑ value pool. Section 40 ‑ 445 affects the closing pool balance, and may give rise to assessable income, if a balancing adjustment event happens to such an asset. Note 2: Section 701 ‑ 10 provides that, for each asset the joining entity has at the joining time, the asset’s tax cost is set at the joining time at the asset’s tax cost setting amount, which is defined by section 701 ‑ 60 as the amount worked out under Division 705. Note 3: Division 58 is about capital allowances for depreciating assets previously owned by an exempt entity. Objects (2) The main objects of this section are: (a) to clarify how sections 40 ‑ 430, 40 ‑ 435 and 40 ‑ 440 operate in relation to the previous pool assets; and (b) to reduce compliance costs by providing that the * tax cost is set for all the previous pool assets in one operation, rather than individually for each such asset. Time of allocation of assets to head company’s low ‑ value pool (3) Sections 40 ‑ 430, 40 ‑ 435, 40 ‑ 440 and 40 ‑ 445 operate as if the * head company of the * consolidated group allocated the previous pool assets to a low ‑ value pool for the income year that includes the joining time. Section 701 ‑ 5 has effect subject to this subsection. Note 1: Under section 40 ‑ 435, the head company must make a reasonable estimate of the taxable use percentage for each asset. Note 2: This subsection affects the percentages and amounts to be taken into account for working out under section 40 ‑ 440 the decline in value of assets in the pool and the closing pool balance. Allocating other low ‑ cost assets to head company’s low ‑ value pool (4) Subsection 40 ‑ 430(1) operates as if the previous pool assets were * low ‑ cost assets. Note: This has the effect that the head company must allocate to the low ‑ value pool each low ‑ cost asset it starts to hold in the income year that includes the joining time or a later income year, whether or not the head company starts to hold the asset because of section 701 ‑ 1. If joining time was in first day of joining entity’s income year (5) If the joining time was in the first day of the joining entity’s income year, section 40 ‑ 440 operates as if: (a) all the previous pool assets were * low ‑ value assets; and (b) the sum of the previous pool assets’ * opening adjustable values for the income year that includes the joining time equalled the * tax cost setting amount for the hypothetical asset worked out on the basis described in subsections (7), (8) and (9) of this section. If joining time was not in first day of joining entity’s income year (6) If the joining time was not in the first day of the joining entity’s income year, section 40 ‑ 440 operates as if: (a) all the previous pool assets were * low ‑ cost assets; and (b) the sum of the previous pool assets’ * costs equalled the total of: (i) the * tax cost setting amount for the hypothetical asset worked out on the basis described in subsections (7), (8) and (9) of this section; and (ii) the expenditure (if any) that was incurred after the joining time (but in the income year that includes that time) and included in the second element of the costs (ignoring this paragraph) of the previous pool assets. Tax cost is set for assets collectively not individually (7) Sections 701 ‑ 10 and 701 ‑ 60 and Division 705 operate as if all the previous pool assets formed a single * depreciating asset (the hypothetical asset ), and were not separate assets. Modified operation of Division 705 for hypothetical asset (8) Sections 705 ‑ 40 and 705 ‑ 57 operate as if the joining entity’s * terminating value for the hypothetical asset were the amount worked out using the table: Modification of basis on which sections 705 ‑ 40 and 705 ‑ 57 operate If the joining time is: Sections 705 ‑ 40 and 705 ‑ 57 operate as if the joining entity’s terminating value for the hypothetical asset were: 1 In the first day of an income year of the joining entity The * closing pool balance for the joining entity’s low ‑ value pool for the previous income year 2 In another day The * closing pool balance for the joining entity’s low ‑ value pool for the non ‑ membership period described in section 701 ‑ 30 that ends just before the joining time Note: Sections 705 ‑ 40 and 705 ‑ 57 are about reduction of an asset’s tax cost setting amount to an amount that may be affected by the joining entity’s terminating value for the asset.

Amendment history: Inserted by No 23 of 2005, effective s. 4, Schedule 1 (items 2–8, 11, 13–19, 21–24, 26, 27, 29–32), Schedule 2 (items 1–11, 14), Schedule 3 (items 1–13, 75–102, 111(1)–(3)), Schedules 4–6, 8, 10 and Schedule 12 (items 2–6, 11(1)): Royal Assent Schedule 12 (item 1): 1 July 2000 | 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 716-335 — Entity leaving group with asset allocated to head company’s low ‑ value pool

(1) This section sets out rules affecting the * head company of a * consolidated group and an entity (the leaving entity ) that ceases to be a * subsidiary member of the group at a time (the leaving time ) in an income year (the leaving year ), if: (a) a * depreciating asset becomes an asset of the leaving entity at the leaving time because section 701 ‑ 1 (Single entity rule) ceases to apply to the leaving entity; and (b) the asset was in the head company’s low ‑ value pool. Note: Section 701 ‑ 40 (Exit history rule) treats the asset as having been allocated to the leaving entity’s low ‑ value pool, with the taxable use percentage estimated by the head company, for the income year for which the head company allocated the asset to the head company’s low ‑ value pool. Objects (2) The main objects of this section are: (a) to ensure that the decline in value of assets in the * head company’s low ‑ value pool and the decline in value of assets in the leaving entity’s low ‑ value pool are worked out so that: (i) for the leaving year, the * depreciating asset is taken into account in working out the decline in value of assets in the head company’s low ‑ value pool only; and (ii) for later income years, the depreciating asset is taken into account in working out the decline in value of assets in the leaving entity’s low ‑ value pool only; and (b) to specify the * adjustable value of the depreciating asset just before and at the leaving time. Reduced decline in value for leaving entity for leaving year (3) The decline in value worked out for the leaving year under subsection 40 ‑ 440(1) for assets in the leaving entity’s low ‑ value pool is reduced by such amount as is reasonable to prevent duplication of deductions for the leaving year in respect of the * depreciating asset by the * head company and the leaving entity. Reduced closing pool balance for head company’s pool for leaving year (4) The * closing pool balance of the * head company’s low ‑ value pool for the leaving year is reduced by so much of the balance as reasonably relates to the * depreciating asset. Cost of head company’s membership interests in leaving entity etc. (5) Sections 701 ‑ 15, 701 ‑ 40 and 701 ‑ 60 and Division 711 have effect as if the * adjustable value of the * depreciating asset for the * head company just before and at the leaving time were such amount as is reasonable, having regard to: (a) the reduction described in subsection (4) of this section; and (b) the taxable use percentage estimated for the depreciating asset by the head company under section 40 ‑ 435. Note 1: Section 701 ‑ 15 provides that, for each membership interest the head company holds in the leaving entity, the interest’s tax cost is set just before the leaving time at the interest’s tax cost setting amount, which is defined by section 701 ‑ 60 as the amount worked out under certain sections of Division 711. Note 2: Division 711 sets the interest’s tax cost setting amount by reference to the head company’s terminating value of the asset, which is to be worked out under section 711 ‑ 30 by reference to the adjustable value of the asset for the head company just before the leaving time. Note 3: Section 701 ‑ 40 has the effect that the adjustable value of the asset for the leaving entity at the leaving time is the same as the adjustable value of the asset for the head company then.

Amendment history: Inserted by No 23 of 2005, effective s. 4, Schedule 1 (items 2–8, 11, 13–19, 21–24, 26, 27, 29–32), Schedule 2 (items 1–11, 14), Schedule 3 (items 1–13, 75–102, 111(1)–(3)), Schedules 4–6, 8, 10 and Schedule 12 (items 2–6, 11(1)): Royal Assent Schedule 12 (item 1): 1 July 2000

s 716-340 — Depreciating assets arising from expenditure in joining entity’s software development pool

(1) This section modifies the basis on which Subdivision 40 ‑ B and sections 40 ‑ 455, 701 ‑ 10, 701 ‑ 55 and 701 ‑ 60 and Division 705 operate if: (a) an entity (the joining entity ) becomes a * subsidiary member of a * consolidated group at a time (the joining time ); and (b) the joining entity had incurred before the joining time expenditure that it allocated to a software development pool; and (c) some or all of the expenditure is reasonably related to * in ‑ house software that: (i) is a * depreciating asset; and (ii) became an asset of the * head company of the consolidated group at the joining time because section 701 ‑ 1 (Single entity rule) applied to the joining entity. Note 1: Subdivision 40 ‑ B allows deductions for the decline in value of a depreciating asset, but only if expenditure on the asset has not been allocated to a software development pool. Section 40 ‑ 455 provides for deduction of expenditure allocated to such a pool. Section 701 ‑ 5 (Entry history rule) treats the head company as having incurred the expenditure that was allocated to the pool. Note 2: Section 701 ‑ 10 provides that, for each asset the joining entity has at the joining time, the asset’s tax cost is set at the joining time at the asset’s tax cost setting amount, which is defined by section 701 ‑ 60 as the amount worked out under Division 705, which in turn depends on the adjustable value of the asset worked out under section 40 ‑ 85. Note 3: Section 701 ‑ 55 affects matters relevant to working out the head company’s deductions for the decline in value of depreciating assets that became assets of the head company at the joining time because section 701 ‑ 1 (Single entity rule) applied to the joining entity. Note 4: This section operates whether or not the joining entity’s deductions under section 40 ‑ 455 for the period before the joining time for expenditure allocated to the pool total 100% of the expenditure allocated to the pool. Object (2) The main object of this section is to ensure that: (a) the * head company’s deductions for the * in ‑ house software: (i) are not worked out under section 40 ‑ 455 on the basis of section 701 ‑ 5 (Entry history rule) treating the expenditure relating to the software as being the head company’s expenditure; and (ii) are instead worked out under Subdivision 40 ‑ B, using the * prime cost method with the * effective life given by subsection 40 ‑ 95(7) and taking account of the * tax cost setting amount for the software; and (b) the tax cost setting amount is worked out in a way that takes account of deductions for the period before the joining time for the expenditure reasonably related to the in ‑ house software. Joining entity taken not to have incurred certain expenditure (3) Subdivision 40 ‑ B and section 40 ‑ 455 operate for the head company core purposes mentioned in section 701 ‑ 1 (Single entity rule) as if the expenditure reasonably related to the * in ‑ house software had not been incurred by the joining entity. Note 1: This has the effects that: (a) subsection 40 ‑ 50(2) does not apply because of section 701 ‑ 5 (Entry history rule) to deny the head company deductions under Subdivision 40 ‑ B for the decline in value of the software; and (b) the head company cannot deduct the expenditure under section 40 ‑ 455 as it operates because of section 701 ‑ 5. Note 2: This does not prevent the head company from deducting under section 40 ‑ 455 expenditure that is not reasonably related to the in ‑ house software and that the head company is treated by section 701 ‑ 5 as having incurred and allocated to a software development pool because the joining entity did. Prime cost method of working out decline in value of software (4) Subsection 701 ‑ 55(2) operates as if the * prime cost method of working out the decline in value of the * in ‑ house software applied just before the joining time. Note: This affects the method of working out the decline in value of the software for the head company of the consolidated group. Effective life of software (5) Subdivision 40 ‑ B operates as if the * effective life of the * in ‑ house software were the period specified for in ‑ house software in subsection 40 ‑ 95(7). Subsection 701 ‑ 55(2) is subject to this subsection. Cost of in ‑ house software (6) Sections 701 ‑ 10 and 701 ‑ 60 and Division 705 (and section 40 ‑ 85, so far as it affects that Division) operate as if the * cost of the * in ‑ house software were the total amount of the joining entity’s expenditure that reasonably related to the software and was allocated to a software development pool. Earlier decline in value of the in ‑ house software (7) Sections 701 ‑ 10 and 701 ‑ 60 and Division 705 (and section 40 ‑ 85, so far as it affects that Division) operate as if the decline in value, and deductions for the decline in value, of the * in ‑ house software for a period before the joining time were the amount worked out under subsection (8). (8) Work out the amount by: (a) working out, for each software development pool to which expenditure relating to the * in ‑ house software was allocated, the amount of the joining entity’s deductions under section 40 ‑ 455 that reasonably relates to the software; and (b) adding up each of those amounts if there are 2 or more such pools. Note: Subsections (6), (7) and (8) can affect the working out of the tax cost setting amount for the in ‑ house software, by affecting the joining entity’s terminating value for the software, which section 705 ‑ 30 defines as being the adjustable value of the software just before the joining time, and which is relevant to sections 705 ‑ 40 and 705 ‑ 57 (which may reduce the tax cost setting amount for the software).

Amendment history: Inserted by No 23 of 2005, effective s. 4, Schedule 1 (items 2–8, 11, 13–19, 21–24, 26, 27, 29–32), Schedule 2 (items 1–11, 14), Schedule 3 (items 1–13, 75–102, 111(1)–(3)), Schedules 4–6, 8, 10 and Schedule 12 (items 2–6, 11(1)): Royal Assent Schedule 12 (item 1): 1 July 2000 | 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 716-345 — Head company taken not to have incurred expenditure

(1) This section has effect if: (a) an entity (the leaving entity ) ceases to be a * subsidiary member of a * consolidated group at a time in an income year (the leaving year ); and (b) under section 701 ‑ 40 (Exit history rule), expenditure is taken to have been allocated by the leaving entity to a software development pool. Note: Section 701 ‑ 40 treats expenditure incurred by the head company of the consolidated group and allocated by that company to a software development pool as having been incurred by the leaving entity and allocated by it to a software development pool. (2) Work out deductions of the * head company of the * consolidated group for income years after the leaving year as if the head company had not incurred the expenditure. (3) The leaving entity cannot deduct an amount for the leaving year for the expenditure it is taken to have allocated to the software development pool.

Amendment history: Inserted by No 23 of 2005, effective s. 4, Schedule 1 (items 2–8, 11, 13–19, 21–24, 26, 27, 29–32), Schedule 2 (items 1–11, 14), Schedule 3 (items 1–13, 75–102, 111(1)–(3)), Schedules 4–6, 8, 10 and Schedule 12 (items 2–6, 11(1)): Royal Assent Schedule 12 (item 1): 1 July 2000

s 716-400 — Tax cost setting and bad debts

(1) The object of this section is to clarify the effect of section 701 ‑ 5 (entry history rule) and subsection 701 ‑ 55(6) in relation to an asset that may give rise to a bad debt. It achieves this object by clarifying that certain things are taken to have happened in relation to the asset through the operation of section 701 ‑ 5 and subsection 701 ‑ 55(6). (2) This section applies if: (a) the tax cost of an asset was set at the time (the joining time ) an entity (the joining entity ) became a subsidiary member of a * consolidated group at the asset’s tax cost setting amount; and (b) the asset is a debt; and (c) any of the following apply: (i) the debt was included in the joining entity’s assessable income before the joining time; (ii) the debt was in respect of money that the joining entity lent before the joining time in the ordinary course of a business of lending money; (iii) the joining entity bought the debt before the joining time in the ordinary course of a business of lending money; and (d) the requirements in subsection 701 ‑ 58(1) (intra ‑ group assets) are not satisfied in relation to the asset. (3) To avoid doubt, in determining the extent to which the * head company of the group can deduct an amount under section 25 ‑ 35 (bad debts) in relation to the asset, section 701 ‑ 5 (entry history rule) and subsection 701 ‑ 55(6) have the effect that, before the joining time: (a) in a case covered by subparagraph (2)(c)(i)—the head company included an amount equal to the tax cost setting amount in its assessable income in respect of the debt; or (b) in a case covered by subparagraph (2)(c)(ii)—the head company lent an amount of money in respect of the debt equal to the tax cost setting amount in the ordinary course of a business of lending money; or (c) in a case covered by subparagraph (2)(c)(iii)—the head company incurred expenditure equal to the tax cost setting amount in buying the debt in the ordinary course of a business of lending money.

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 716-440 — Membership interests in joining entity not subject to CGT under Division 855—foreign entity ceasing to hold interests

(1) Subsection (3) applies if: (a) an entity (the joining entity ) becomes a * subsidiary member of a * consolidated group at a time (the joining time ); and (b) another entity (the disposing entity ) ceased to hold * membership interests in the joining entity during the period that: (i) started 12 months before the joining time; and (ii) ended immediately after the joining time; and (c) a * CGT event happened because the disposing entity ceased to hold the membership interests; and (d) either: (i) a * capital gain or * capital loss of the disposing entity from the CGT event was disregarded because of the operation of Division 855; or (ii) if there had been a capital gain or capital loss of the disposing entity from the CGT event, the capital gain or capital loss would have been disregarded because of the operation of Division 855; and (e) section 701 ‑ 10 (cost to head company of assets of joining entity) applies to the joining entity’s assets in respect of the joining entity becoming a subsidiary member of the group (disregarding subsection (3) of this section); and (f) it is reasonable to conclude that, throughout the period mentioned in paragraph (b), the sum of the * total participation interests held by an entity (the control entity ) and its * associates in the joining entity was 50% or more; and (g) in a case where the control entity is not the disposing entity—it is reasonable to conclude that the sum of the total participation interests held by the control entity and its associates in the disposing entity was 50% or more at the time the CGT event happened. (2) For the purposes of paragraphs (1)(f) and (g), in working out the sum of the * total participation interests held by the control entity and its * associates in another entity, take into account: (a) a particular * direct participation interest; or (b) a particular * indirect participation interest; held in the other entity only once if it would otherwise be counted more than once because the entity holding it is an associate of the control entity. (3) The following provisions do not apply to the joining entity’s assets in respect of the joining entity becoming a * subsidiary member of the group: (a) section 701 ‑ 10 (cost to head company of assets of joining entity); (b) subsection 701 ‑ 35(4) (setting value of trading stock at tax ‑ neutral amount); (c) subsection 701 ‑ 35(5) (setting value of registered emissions unit at tax ‑ neutral amount). Note: This subsection does not affect the application of subsection 701 ‑ 1(1) (the single entity rule). (4) Subsection (5) applies if: (a) an entity (the higher level entity ) holds * membership interests in the joining entity (whether directly or through one or more interposed entities) at a time during the period mentioned in paragraph (1)(b); and (b) the higher level entity becomes a * subsidiary member of the * consolidated group at the joining time; and (c) the requirement in paragraph (1)(b) is not satisfied (disregarding subsection (5)); and (d) the requirement in paragraph (1)(b) would be satisfied if the reference in paragraph (1)(b) to membership interests in the joining entity included a reference to membership interests in the higher level entity. (5) Treat the reference in paragraph (1)(b) to * membership interests in the joining entity as including a reference to membership interests in the higher level entity.

Amendment history: Inserted by No 14 of 2018, effective Sch 1: 1 Apr 2018 (s 2(1) items 2–4) | Amended by No 64 of 2020, effective Sch 3 (items 72–122): 1 July 2020 (s 2(1) item 5) Sch 3 (items 228–239, 325, 326): 1 Oct 2020 (s 2(1) item 6) Sch 3 (items 327–330): 1 July 2017 (s 2(1) item 7)

s 716-500 — Head company bound by agreements binding on subsidiary members

Section 355 ‑ 220 (about R&D activities conducted for a foreign entity) applies to the * head company of a * consolidated group as if the head company were bound by an agreement during any period that a * subsidiary member of the group is bound by the agreement.

Amendment history: Inserted by No 93 of 2011, effective Schedule 1, Schedule 3 (items 1–4, 15–42, 54–107) and Schedule 4 (items 1–9): Royal Assent

s 716-505 — History for entitlement to tax offset: joining entity

If: (a) a company becomes a * subsidiary member of a * consolidated group; and (b) apart from this section, things happening in relation to the company before it became a subsidiary member would, because of section 701 ‑ 5 (the entry history rule), be taken into account as things happening in relation to the * head company for working out the head company’s * aggregated turnover for the purposes of section 355 ‑ 100 (tax offsets for R&D); the things happening are not to be taken into account as mentioned in paragraph (b).

Amendment history: Inserted by No 93 of 2011, effective Schedule 1, Schedule 3 (items 1–4, 15–42, 54–107) and Schedule 4 (items 1–9): Royal Assent

s 716-510 — History for entitlement to tax offset: leaving entity

If: (a) a company ceases to be a * subsidiary member of a * consolidated group; and (b) while the company was a subsidiary member, things happened in relation to an entity which, if section 701 ‑ 1 (the single entity rule) were disregarded: (i) would be * connected with the company; or (ii) would be an * affiliate of the company; or (iii) would have the company as an affiliate; and (c) those things would, if section 701 ‑ 1 were disregarded, have been taken into account in working out the company’s * aggregated turnover for the purposes of section 355 ‑ 100 (tax offsets for R&D); and (d) the things are not also things that, because of section 701 ‑ 40 (the exit history rule), are taken into account as things happening in relation to an eligible asset etc. (within the meaning of that section) of the company in working out for the entity core purposes the company’s aggregated turnover for the purposes of section 355 ‑ 100; the things are to be taken into account in working out the company’s aggregated turnover for the purposes of section 355 ‑ 100.

Amendment history: Inserted by No 93 of 2011, effective Schedule 1, Schedule 3 (items 1–4, 15–42, 54–107) and Schedule 4 (items 1–9): Royal Assent

s 716-800 — Allocating amounts to periods if head company and subsidiary member have different income years

(1) The principles in this section apply if: (a) an entity becomes, or stops being, a * subsidiary member of a * consolidated group; and (b) the entity has an income year that starts and ends at a different time from when the income year of the * head company of the group starts and ends. (2) Items are to be allocated to, or apportioned among, periods (whether consisting of all or part of an income year of the entity or * head company): (a) in the most appropriate way having regard to the objects of this Part, and of particular provisions of this Part; and (b) in particular, so as to ensure that what is in substance the same item is recognised only once for what is in substance the same purpose.

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 716-850 — Grossing up threshold amounts for periods of less than 365 days

(1) Under some provisions of this Act, something that is relevant to working out: (a) an entity’s taxable income (if any); or (b) the income tax (if any) payable on an entity’s taxable income; or (c) an entity’s loss (if any) of a particular * sort; is determined on the basis of a comparison between an amount worked out for an income year, or an amount * derived from 2 or more such amounts, and another amount. Note: The other amount assumes an income year of 365 days. (2) This section affects how such a provision (the threshold provision ) operates for the purposes of subsection 701 ‑ 30(3), which requires each thing covered by paragraph (1)(a), (b) or (c) of this section to be worked out for an entity for a non ‑ membership period (under section 701 ‑ 30) during an income year. Note: A non ‑ membership period is a period (of less than an income year) when the entity is not a subsidiary member of any consolidated group. (3) An amount that would otherwise be worked out for the non ‑ membership period, for the purposes of the comparison under the threshold provision, is instead: (a) to be worked out by reference to the period (the reference period ) starting at the start of the income year and ending at the end of the non ‑ membership period; and (b) then to be grossed up by multiplying it by this fraction:

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 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 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 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)

s 716-855 — Working out the cost base or reduced cost base of a pre ‑ CGT asset after certain roll ‑ overs

If: (a) it is necessary for the purposes of this Part to work out the * cost base or * reduced cost base of a * pre ‑ CGT asset owned at a particular time; and (b) before that time: (i) the owner was the recipient company involved in a roll ‑ over under Subdivision 126 ‑ B in relation to a * CGT event that happened in relation to the CGT asset; or (ii) the owner was the transferee in relation to a disposal of the CGT asset to which former section 160ZZO of the Income Tax Assessment Act 1936 applied; the cost base or reduced cost base is worked out as if, in applying Subdivision 126 ‑ B or former section 160ZZO in relation to the CGT event or the disposal, the provisions of that Subdivision or section applying to CGT assets * acquired on or after 20 September 1985 replaced those that applied to CGT assets acquired on or before that date. Note: The effect is that the owner’s cost base or reduced cost base will be the same as that of the originating company or transferor, as is the case with post ‑ CGT assets.

Amendment history: Inserted by No 107 of 2003, effective Sch 6: 1 July 2003 (s 2(1) item 3) Sch 7 (items 6–8): 30 June 2003 (s 2(1) item 5) Sch 7 (item 15): 17 Dec 2003 (s 2(1) item 7) Remainder: 21 Oct 2003 (s 2(1) items 1, 2, 4, 6, 8) | Amended by No 101 of 2006, effective Schedules 3 and 4: 1 Jan 2008 Remainder: Royal Assent

s 716-860 — CGT event straddling joining or leaving time

(1) This section applies if: (a) an entity (the joining entity ) becomes a subsidiary member of a * consolidated group at a particular time (the joining time ); and (b) disregarding the operation of subsection 701 ‑ 1(1) (the single entity rule), the joining entity held a * CGT asset at the joining time; and (c) taking into account the operation of subsection 701 ‑ 1(1) (the single entity rule), the * head company of the group held the CGT asset at the joining time; and (d) a * CGT event happened in relation to the asset at a time before the joining time (disregarding this section), but the circumstances that gave rise to the CGT event first existed at a time on or after the joining time. (2) This section also applies if: (a) an entity (the leaving entity ) ceases to be a * subsidiary member of a * consolidated group at a particular time (the leaving time ); and (b) taking into account the operation of subsection 701 ‑ 1(1) (the single entity rule), the * head company of the group held a * CGT asset at the leaving time; and (c) disregarding the operation of subsection 701 ‑ 1(1) (the single entity rule), the leaving entity held the CGT asset at the leaving time; and (d) a * CGT event happened in relation to the asset at a time before the leaving time (disregarding this section), but the circumstances that gave rise to the CGT event first existed at a time on or after the leaving time. (3) For the purposes of this Act, treat the * CGT event as happening at the time when the circumstances that gave rise to the CGT event first existed.

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 717-1 — What this Subdivision is about

If an entity becomes a subsidiary member of a consolidated group, the head company receives any tax offsets under section 770 ‑ 10 that arise because the entity pays foreign income tax while it is a subsidiary member of the group. Table of sections Object 717 ‑ 5 Object of this Subdivision Foreign income tax on amounts in head company’s assessable income 717 ‑ 10 Head company taken to be liable for subsidiary member’s foreign income tax

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) | Repealed and substituted by No 143 of 2007, effective Schedule 1 (items 1, 4, 128–194, 222, 223, 225, 226), Schedule 2, Schedule 5 (items 1–16, 48(1)–(3)), Schedule 6 and Schedule 7 (items 18–68): Royal Assent Schedule 5 (items 31–46): 15 Mar 2007 (s 2(1) item 6)

s 717-5 — Object of this Subdivision

The object of this Subdivision is to allow the * head company of a * consolidated group to get the benefit of * foreign income tax paid in respect of amounts included in the head company’s assessable income because another entity is or was a * subsidiary member of the group.

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) | Repealed and substituted by No 143 of 2007, effective Schedule 1 (items 1, 4, 128–194, 222, 223, 225, 226), Schedule 2, Schedule 5 (items 1–16, 48(1)–(3)), Schedule 6 and Schedule 7 (items 18–68): Royal Assent Schedule 5 (items 31–46): 15 Mar 2007 (s 2(1) item 6)

s 717-10 — Head company taken to be liable for subsidiary member’s foreign income tax

(1) This section operates if: (a) an entity was a * subsidiary member of a * consolidated group for all or part of an income year; and (b) an amount was included in the * ordinary income or * statutory income of the * head company of the group for that income year; and (c) the entity paid * foreign income tax (except * credit absorption tax, * unitary tax, * foreign IIR tax or * foreign UTPR tax) in respect of the amount. (2) Division 770 operates as if: (a) the * head company had paid the * foreign income tax; and (b) the entity had not paid the foreign income tax. Note: Division 770 provides a tax offset for foreign income tax paid. (3) This section does not limit the operation of Division 770.

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) | Repealed and substituted by No 143 of 2007, effective Schedule 1 (items 1, 4, 128–194, 222, 223, 225, 226), Schedule 2, Schedule 5 (items 1–16, 48(1)–(3)), Schedule 6 and Schedule 7 (items 18–68): Royal Assent Schedule 5 (items 31–46): 15 Mar 2007 (s 2(1) item 6) | Amended by No 134 of 2024, effective sch 1 (items 6 ‑ 29, 66): 11 Dec 2024 (s 2(1) item 1)

s 717-200 — What this Subdivision is about

Each attribution surplus and post FIF abolition surplus relating to a company that becomes a subsidiary member of a consolidated group is transferred to the head company of the group. Table of sections Object 717 ‑ 205 Object of this Subdivision Transfers 717 ‑ 210 Attribution surpluses 717 ‑ 220 FIF surpluses 717 ‑ 227 Deferred attribution credits

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 143 of 2007, effective Schedule 1 (items 1, 4, 128–194, 222, 223, 225, 226), Schedule 2, Schedule 5 (items 1–16, 48(1)–(3)), Schedule 6 and Schedule 7 (items 18–68): Royal Assent Schedule 5 (items 31–46): 15 Mar 2007 (s 2(1) item 6) | Amended by No 114 of 2010, effective Schedule 1 (items 40–86, 93(1), 95): Royal Assent

s 717-205 — Object of this Subdivision

The main object of this Subdivision is to avoid double taxation by transferring from a company (the joining company ) that becomes a * subsidiary member of a * consolidated group at a time (the joining time ) to the * head company of the group the benefit of each of these: (a) the attribution surplus (if any) for an attribution account entity (within the meaning of Part X of the Income Tax Assessment Act 1936 ) in relation to the joining company just before the joining time; (b) the post FIF abolition surplus (if any) (within the meaning of the Income Tax Assessment Act 1936 ) for a FIF attribution account entity (within the meaning of former Part XI of that Act) in relation to the joining company just before the joining time.

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 143 of 2007, effective Schedule 1 (items 1, 4, 128–194, 222, 223, 225, 226), Schedule 2, Schedule 5 (items 1–16, 48(1)–(3)), Schedule 6 and Schedule 7 (items 18–68): Royal Assent Schedule 5 (items 31–46): 15 Mar 2007 (s 2(1) item 6) | Amended by No 114 of 2010, effective Schedule 1 (items 40–86, 93(1), 95): Royal Assent

s 717-210 — Attribution surpluses

(1) This section operates for the purposes of Part X of the Income Tax Assessment Act 1936 if: (a) a company (the joining company ) becomes a * subsidiary member of a * consolidated group at a time (the joining time ); and (b) just before the joining time there was an attribution surplus for an attribution account entity in relation to the joining company for the purposes of that Part; and (c) just before the joining time the joining company’s attribution account percentage in relation to the attribution account entity for the purposes of that Part was more than nil. Credit in relation to the head company (2) An attribution credit arises at the joining time for the attribution account entity in relation to the * head company of the group. The credit is equal to the attribution surplus. Debit in relation to the joining company (3) An attribution debit arises at the joining time for the attribution account entity in relation to the joining company. The debit is equal to the attribution surplus.

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 717-220 — FIF surpluses

(1) This section operates for the purposes of sections 23AK and 23B of the Income Tax Assessment Act 1936 if: (a) a company (the joining company ) becomes a * subsidiary member of a * consolidated group at a time (the joining time ); and (b) just before the joining time there was a post FIF abolition surplus for a FIF attribution account entity in relation to the joining company for the purposes of those sections; and (c) just before the joining time, the joining company’s FIF attribution account percentage in relation to the FIF attribution account entity for the purposes of those sections was more than nil. Credit in relation to the head company (2) A post FIF abolition credit arises at the joining time for the FIF attribution account entity in relation to the * head company of the group. The credit is equal to the post FIF abolition surplus. Debit in relation to the joining company (3) A post FIF abolition debit arises at the joining time for the FIF attribution account entity in relation to the joining company. The debit is equal to the post FIF abolition surplus. Definitions (4) In this section: FIF attribution account entity has the same meaning as in former Part XI of the Income Tax Assessment Act 1936 . FIF attribution account percentage has the same meaning as in former Part XI of the Income Tax Assessment Act 1936 . post FIF abolition credit has the same meaning as in the Income Tax Assessment Act 1936 . post FIF abolition debit has the same meaning as in the Income Tax Assessment Act 1936 . post FIF abolition surplus has the same meaning as in the Income Tax Assessment Act 1936 .

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) | Repealed and substituted by No 114 of 2010, effective Schedule 1 (items 40–86, 93(1), 95): Royal Assent

s 717-227 — Deferred attribution credits

(1) This section operates for the purposes of Part X of the Income Tax Assessment Act 1936 if: (a) a company (the joining company ) becomes a * subsidiary member of a * consolidated group at a time (the joining time ); and (b) assuming the joining company had not done so, an attribution credit would have arisen under subsection 371(8) of that Act at a later time for an attribution account entity in relation to the joining company for the purposes of that Part. Credit in relation to the head company (2) The attribution credit arises instead at the later time for the attribution account entity in relation to 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 717-235 — What this Subdivision is about

Each attribution surplus and post FIF abolition surplus relating to a company that ceases to be a subsidiary member of a consolidated group is transferred to that company from the head company of the group. Table of sections Object 717 ‑ 240 Object of this Subdivision Transfers 717 ‑ 245 Attribution surpluses 717 ‑ 255 FIF surpluses 717 ‑ 262 Deferred attribution credits

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 143 of 2007, effective Schedule 1 (items 1, 4, 128–194, 222, 223, 225, 226), Schedule 2, Schedule 5 (items 1–16, 48(1)–(3)), Schedule 6 and Schedule 7 (items 18–68): Royal Assent Schedule 5 (items 31–46): 15 Mar 2007 (s 2(1) item 6) | Amended by No 114 of 2010, effective Schedule 1 (items 40–86, 93(1), 95): Royal Assent

s 717-240 — Object of this Subdivision

The main object of this Subdivision is to avoid double taxation by transferring from the * head company of a * consolidated group to a company (the leaving company ) that ceases to be a * subsidiary member of the group at a time (the leaving time ) the benefit of each of these surpluses (to the extent that each surplus can be attributed to the leaving company): (a) the attribution surplus (if any) for an attribution account entity (within the meaning of Part X of the Income Tax Assessment Act 1936 ) in relation to the head company just before the leaving time; (b) the post FIF abolition surplus (if any) (within the meaning of the Income Tax Assessment Act 1936 ) for a FIF attribution account entity (within the meaning of former Part XI of that Act) in relation to the head company just before the leaving time.

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 143 of 2007, effective Schedule 1 (items 1, 4, 128–194, 222, 223, 225, 226), Schedule 2, Schedule 5 (items 1–16, 48(1)–(3)), Schedule 6 and Schedule 7 (items 18–68): Royal Assent Schedule 5 (items 31–46): 15 Mar 2007 (s 2(1) item 6) | Amended by No 114 of 2010, effective Schedule 1 (items 40–86, 93(1), 95): Royal Assent

s 717-245 — Attribution surpluses

(1) This section operates for the purposes of Part X of the Income Tax Assessment Act 1936 if: (a) a company (the leaving company ) ceases to be a * subsidiary member of a * consolidated group at a time (the leaving time ); and (b) just before the leaving time there was, for the purposes of that Part, an attribution surplus for an attribution account entity in relation to the * head company of the group; and (c) at the leaving time the leaving company’s attribution account percentage in relation to the attribution account entity for the purposes of that Part is more than nil. Credit in relation to leaving company (2) An attribution credit arises at the leaving time for the attribution account entity in relation to the leaving company. The credit is the amount worked out under subsection (4). Debit in relation to head company (3) An attribution debit arises at the leaving time for the attribution account entity in relation to the company that was the * head company of the group just before the leaving time. The debit is the amount worked out under subsection (4). Amount of credit and debit (4) The amount of the credit and debit is worked out using the formula:

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 717-255 — FIF surpluses

(1) This section operates for the purposes of sections 23AK and 23B of the Income Tax Assessment Act 1936 (the 1936 Act ) if: (a) a company (the leaving company ) ceases to be a * subsidiary member of a * consolidated group at a time (the leaving time ); and (b) just before the leaving time, there was a post FIF abolition surplus for a FIF attribution account entity in relation to the * head company of the group for the purposes of those sections; and (c) at the leaving time, the leaving company’s FIF attribution account percentage in relation to the FIF attribution account entity for the purposes of those sections is more than nil. Credit in relation to the leaving company (2) A post FIF abolition credit arises at the leaving time for the FIF attribution account entity in relation to the leaving company. The credit is the amount worked out under subsection (4). Debit in relation to head company (3) A post FIF abolition debit arises at the leaving time for the FIF attribution account entity in relation to the company that was the * head company of the group just before the leaving time. The debit is the amount worked out under subsection (4). Amount of credit and debit (4) The amount of the credit and debit is worked out using the formula: Definitions (5) In this section: FIF attribution account entity has the same meaning as in former Part XI of the Income Tax Assessment Act 1936 . FIF attribution account percentage has the same meaning as in former Part XI of the Income Tax Assessment Act 1936 . post FIF abolition credit has the same meaning as in the Income Tax Assessment Act 1936 . post FIF abolition debit has the same meaning as in the Income Tax Assessment Act 1936 . post FIF abolition surplus has the same meaning as in the Income Tax Assessment Act 1936 .

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) | Repealed and substituted by No 114 of 2010, effective Schedule 1 (items 40–86, 93(1), 95): Royal Assent

s 717-262 — Deferred attribution credits

(1) This section operates for the purposes of Part X of the Income Tax Assessment Act 1936 if: (a) a company (the leaving company ) ceases to be a * subsidiary member of a * consolidated group at a time (the leaving time ); and (b) disregarding this section, an attribution credit (the original credit ) will arise under subsection 371(8) of that Act at a later time for an attribution account entity in relation to the * head company of the group (including because of the operation of section 717 ‑ 227) for the purposes of that Part; and (c) at the leaving time the leaving company’s attribution account percentage in relation to the attribution account entity for the purposes of that Part is more than nil. Credit in relation to the leaving company (2) An attribution credit arises at the later time for the attribution account entity in relation to the leaving company. The credit is the amount worked out under subsection (3). Amount of credit (3) The amount of the credit is worked out using the formula: Reduction in credit in relation to the head company (4) The attribution credit that arises at the later time for the attribution account entity in relation to the * head company is reduced by the amount of the attribution credit that arises under subsection (2) in relation to the leaving 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 717-700 — What this Subdivision is about

The head company of a consolidated group is treated for certain purposes as an offshore banking unit at a time when a subsidiary member of the group is an offshore banking unit. Table of sections 717 ‑ 705 Object of this Subdivision 717 ‑ 710 Head company treated as OBU

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 717-705 — Object of this Subdivision

The object of this Subdivision is to ensure that certain rules in the Income Tax Assessment Act 1936 relating to offshore banking units interact properly with the consolidation regime in this 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 717-710 — Head company treated as OBU

(1) Division 9A of Part III of the Income Tax Assessment Act 1936 applies to the * head company of a * consolidated group as if the head company were an OBU (within the meaning of that Division) at a time when a * subsidiary member of the group is an OBU (within the meaning of that Division). (2) Subsection (1) operates for the head company core purposes mentioned in subsection 701 ‑ 1(2) .

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 719-2 — Modified application of Part 3 ‑ 90 to MEC groups

(1) This Part (other than Division 703 and this Division) has effect in relation to a * MEC group in the same way in which it has effect in relation to a * consolidated group. Note: A provision in this Part (other than in Division 703 or in this Division) mentioning 2 separate consolidated groups will, under subsection (1), have an additional operation when the groups are both MEC groups or when one is a MEC group and the other is a consolidated group. (2) However, that effect is subject to the modifications set out in this Division. (3) For the purposes of subsection (1), a reference in this Part (other than in Division 703 or this Division) to a provision in Division 703 applies as if it referred instead to that provision or the corresponding provision in Subdivision 719 ‑ B (as appropriate).

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 719-4 — What this Subdivision is about

A MEC group and a potential MEC group each consist of certain Australian ‑ resident entities that are wholly ‑ owned subsidiaries of a foreign top company. A company that is a first ‑ tier subsidiary of the top company is a tier ‑ 1 company. A MEC group cannot be formed unless there are at least 2 tier ‑ 1 companies of the top company that are eligible to be members of the group. A MEC group becomes consolidated at a time chosen by the eligible tier ‑ 1 companies. One of the eligible tier ‑ 1 companies becomes the head company of the group. The remaining members of the group are the subsidiary members. Table of sections Basic concepts 719 ‑ 5 What is a MEC group ? 719 ‑ 10 What is a potential MEC group? 719 ‑ 15 What is an eligible tier ‑ 1 company ? 719 ‑ 20 What is a top company and a tier ‑ 1 company ? 719 ‑ 25 Head company, subsidiary members and members of a MEC group 719 ‑ 30 Treating entities as wholly ‑ owned subsidiaries by disregarding employee shares 719 ‑ 35 Treating entities held through non ‑ fixed trusts as wholly ‑ owned subsidiaries 719 ‑ 40 Special conversion event—potential MEC group 719 ‑ 45 Application of sections 703 ‑ 20 and 703 ‑ 25 Choice to consolidate a potential MEC group 719 ‑ 50 Eligible tier ‑ 1 companies may choose to consolidate a potential MEC group 719 ‑ 55 When choice starts to have effect Provisional head company 719 ‑ 60 Appointment of provisional head company 719 ‑ 65 Qualifications for the provisional head company of a MEC group 719 ‑ 70 Income year of new provisional head company to be the same as that of former provisional head company Head company 719 ‑ 75 Head company Notice of events affecting group 719 ‑ 76 Notice of choice to consolidate 719 ‑ 77 Notice in relation to new eligible tier ‑ 1 members etc. 719 ‑ 78 Notice of special conversion event 719 ‑ 79 Notice of appointment of provisional head company after formation of group 719 ‑ 80 Notice of events affecting MEC group Effects of change of head company 719 ‑ 85 Application 719 ‑ 90 New head company treated as substituted for old head company at all times before the transition time 719 ‑ 95 No consequences of old head company becoming, and new head company ceasing to be, subsidiary member of the group

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | 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 719-5 — What is a MEC group ?

When MEC group comes into existence (1) A MEC (multiple entry consolidated) group comes into existence when: (a) a choice, by 2 or more * eligible tier ‑ 1 companies of a * top company, that the * potential MEC group derived from those companies be consolidated starts to have effect under section 719 ‑ 55; or (b) a * special conversion event happens to a potential MEC group derived from an eligible tier ‑ 1 company of a top company. Original members of a MEC group that results from a choice (2) A MEC group that results from a choice by 2 or more companies under section 719 ‑ 50 consists of the potential MEC group derived from time to time from whichever one or more of those companies continue to be eligible tier ‑ 1 companies of the top company. This subsection has effect subject to subsection (4) (which deals with new eligible tier ‑ 1 members). Original members of a MEC group that results from a special conversion event (3) A MEC group that results from a special conversion event consists of the potential MEC group derived from time to time from whichever one or more of the following companies continue to be eligible tier ‑ 1 companies of the top company: (a) the company mentioned in paragraph 719 ‑ 40(1)(b); (b) the companies specified in the notice under paragraph 719 ‑ 40(1)(e). This subsection has effect subject to subsection (4) (which deals with new eligible tier ‑ 1 members). New eligible tier ‑ 1 members of a MEC group (4) 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) at a particular time after the MEC group came into existence, one or more other companies become eligible tier ‑ 1 companies of the top company; and (c) the * provisional head company of the MEC group makes a choice in writing no later than the day mentioned in subsection (6): (i) specifying one or more of the companies mentioned in paragraph (b); and (ii) stating that the specified companies are to become members of the MEC group with effect from that time; and (d) if: (i) a company specified in the choice was a member of another MEC group immediately before that time; and (ii) all of the eligible tier ‑ 1 companies in that other MEC group became eligible tier ‑ 1 companies of the top company at that time; each eligible tier ‑ 1 company in that other MEC group is specified in the choice; then, with effect from that time, the MEC group mentioned in paragraph (a) is taken to consist of the potential MEC group derived from time to time from whichever one or more of the following companies continue to be eligible tier ‑ 1 companies of the top company: (e) the companies mentioned in paragraph (a); (f) the companies specified in the choice. Note: The provisional head company of the group must give the Commissioner a notice in the approved form containing information about each entity that becomes a subsidiary member of the group on that day because of the choice (see sections 719 ‑ 77 and 719 ‑ 80). (5) To avoid doubt, paragraph (4)(a) applies to a MEC group even if the composition of the group has been worked out because of one or more previous applications of subsection (4). (6) The day mentioned in paragraph (4)(c) is: (a) if the company mentioned in subsection (6A) is required to give the Commissioner its * income tax return for the income year during which the time mentioned in paragraph (4)(b) occurs—the day on which that company gives the Commissioner that income tax return; or (b) otherwise—the last day in the period within which that company would be required to give the Commissioner such a return if it were required to give the Commissioner such a return. (6A) The company is: (a) in a case where subsection 719 ‑ 75(1) or (2) applies—the company that will be the * head company of the group as at the end of the income year; and (b) in a case where subsection 719 ‑ 75(3) applies—the company that will be the head company of the group immediately before the group ceased to exist. Continued existence of MEC group (7) If a MEC group (the first MEC group ) consists of the members of a potential MEC group derived from one or more eligible tier ‑ 1 companies of a top company, the first MEC group continues to exist until: (a) the potential MEC group ceases to exist; or (b) there is a change in the identity of the top company, and the eligible tier ‑ 1 companies that were members of the first MEC group immediately before the change become members of another MEC group immediately after the change; or (c) there ceases to be a provisional head company of the first MEC group. The first MEC group ceases to exist when one of those events happens. Note: Subsection 719 ‑ 10(7) sets out the circumstances in which the potential MEC group ceases to exist.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended 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 719-10 — What is a potential MEC group?

(1) A potential MEC group derived from one or more * eligible tier ‑ 1 companies of a * top company consists of the following members: (a) those eligible tier ‑ 1 companies; (b) all of the other entities (if any) which: (i) meet the requirements of the table; or (ii) are entities for which the requirements in section 701C ‑ 10 of the Income Tax (Transitional Provisions) Act 1997 are met; or (iii) are entities for which the requirements in section 701C ‑ 15 of the Income Tax (Transitional Provisions) Act 1997 are met. Requirements for other entities Column 1 Income tax treatment requirements Column 2 Australian residence requirements Column 3 Ownership requirements The entity must be a company, trust or partnership and, if it is a company, all or some of its taxable income (if any) must have been taxable at a rate that is or equals the * corporate tax rate apart from this Part The entity must not be covered by an item in the table in section 703 ‑ 20 The entity must not be a non ‑ profit company (as defined in the Income Tax Rates Act 1986 ) The entity must: (a) be an Australian resident (but not a * prescribed dual resident), if it is a company; or (b) meet the conditions in item 1, 2 or 3 of the table in section 703 ‑ 25, if it is a trust; or (c) be a partnership The entity must be: (a) a * wholly ‑ owned subsidiary of any of those * eligible tier ‑ 1 companies; or (b) an entity that would be covered by paragraph (a), if it were assumed that all of the membership interests that are beneficially owned by any of those eligible tier ‑ 1 companies were owned by a single one of those eligible tier ‑ 1 companies (2) For the purposes of column 3 of the table, if there are one or more entities interposed between an entity (the test entity ) and an eligible tier ‑ 1 company, the test entity can be a wholly ‑ owned subsidiary of the eligible tier ‑ 1 company only if each of the interposed entities: (a) meets the conditions in columns 1 and 2 of the table; or (b) holds membership interests only as a nominee of one or more entities each of which is: (i) an eligible tier ‑ 1 company of the top company; or (ii) a wholly ‑ owned subsidiary of an eligible tier ‑ 1 company of the top company, being a subsidiary that meets the conditions in columns 1 and 2 of the table. (3) For the purposes of subparagraph (2)(b)(ii), in determining whether an entity is a wholly ‑ owned subsidiary of an eligible * tier ‑ 1 company of the * top company, assume that all of the * membership interests that are beneficially owned by eligible tier ‑ 1 companies of the top company were owned by a single eligible tier ‑ 1 company of the top company. Only one eligible tier ‑ 1 company in a potential MEC group (6) To avoid doubt, if: (a) there is only one * eligible tier ‑ 1 company of a * top company; and (b) there are no entities which meet the requirements of the table in subsection (1); and (c) there are no entities for which the requirements mentioned in subparagraph (1)(b)(ii) are met; and (d) there are no entities for which the requirements mentioned in subparagraph (1)(b)(iii) are met; the * potential MEC group derived from the eligible tier ‑ 1 company consists of the eligible tier ‑ 1 company alone. When potential MEC group ceases to exist (7) If a * potential MEC group is derived from one or more * eligible tier ‑ 1 companies of a * top company, the potential MEC group ceases to exist when: (a) none of those companies are eligible tier ‑ 1 companies of the top company; or (b) there is a change in the identity of the top company, and the eligible tier ‑ 1 companies that were members of the group immediately before the change are not the same as the eligible tier ‑ 1 companies that are members of the group immediately after the change. Continuity of potential MEC group (8) If: (a) a * potential MEC group is derived from one or more * eligible tier ‑ 1 companies of a * top company; and (b) there is a change in the identity of the top company in relation to the potential MEC group; and (c) the eligible tier ‑ 1 companies that were members of the group immediately before the change are the same as the eligible tier ‑ 1 companies that are members of the group immediately after the change; the change does not affect the continuity of: (d) the group; or (e) the status of any of those companies as eligible tier ‑ 1 companies of the top company.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1)) | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5)

s 719-15 — What is an eligible tier ‑ 1 company ?

(1) A * tier ‑ 1 company of a * top company is an eligible tier ‑ 1 company if subsection (2) does not apply to the tier ‑ 1 company. (2) This subsection applies to a * tier ‑ 1 company if: (a) there are one or more entities interposed between the tier ‑ 1 company and the * top company; and (b) the conditions in subsection (3) are satisfied in relation to at least one of those interposed entities. (3) For the purposes of paragraph (2)(b), the conditions are as follows: (a) the interposed entity must be one of the following: (i) a company that is a foreign resident; (ii) a * prescribed dual resident; (iii) a trust that does not meet the conditions in item 1, 2 or 3 of the table in section 703 ‑ 25; (iv) a trust that meets the conditions in item 1, 2 or 3 of the table in section 703 ‑ 25 and is not a * wholly ‑ owned subsidiary of another * tier ‑ 1 company of the * top company; (v) an entity covered by an item in the table in section 703 ‑ 20; (vi) a company that is an Australian resident, where no part of its taxable income (if any) would be taxable at a rate that is or equals the * general company rate; (vii) a non ‑ profit company (as defined in the Income Tax Rates Act 1986 ) that is a wholly ‑ owned subsidiary of another tier ‑ 1 company of the top company; (b) the interposed entity must not hold * membership interests only as nominee of one or more entities each of which is: (i) another tier ‑ 1 company of the top company; or (ii) an entity that is a wholly ‑ owned subsidiary of another tier ‑ 1 company of the top company; (c) at least one of the following entities must hold a membership interest in the interposed entity: (i) another tier ‑ 1 company of the top company; (ii) a wholly ‑ owned subsidiary of another tier ‑ 1 company of the top company; (iii) an entity that holds membership interests only as a nominee of one or more entities each of which is mentioned in subparagraph (i) or (ii). (4) For the purposes of subparagraphs (3)(a)(iv) and (vii) and paragraphs (3)(b) and (c), in determining whether an entity is a wholly ‑ owned subsidiary of another * tier ‑ 1 company of the * top company, assume that all of the * membership interests that are beneficially owned by tier ‑ 1 companies of the top company were owned by a single tier ‑ 1 company of the top company.

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

s 719-20 — What is a top company and a tier ‑ 1 company ?

(1) At a particular time, a company is: (a) a top company if the requirements in item 1 of the table are met; or (b) a tier ‑ 1 company of the top company if the requirements in item 2 of the table are met. Top companies and tier ‑ 1 companies Column 1 Kind of entity Column 2 Income tax treatment requirements Column 3 Residence requirements Column 4 Ownership requirements 1 Top company No specific requirements The company must be a foreign resident The company must not be a * wholly ‑ owned subsidiary of another company (other than a company that is a * prescribed dual resident, or a company that is an Australian resident that fails to meet a condition in column 2 of item 2) 2 Tier ‑ 1 company The company must have all or some of its taxable income (if any) taxed at a rate that is or equals the * corporate tax rate apart from this Part The company must not be covered by an item in the table in section 703 ‑ 20 The company must be an Australian resident (but not a * prescribed dual resident) The company: (a) must be a * wholly ‑ owned subsidiary of the * top company; and (b) must not be a wholly ‑ owned subsidiary of a company that is an Australian resident (other than a company that fails to meet a condition in column 2 or 3) (2) For the purposes of paragraph (b) of column 4 of item 2 of the table, in determining whether a company (the test company) is a * tier ‑ 1 company, if 2 or more other companies beneficially own all of the * membership interests in the test company, and each of those other companies: (a) is a * wholly ‑ owned subsidiary of the * top company; and (b) meets the conditions in columns 2 and 3 of item 2 of the table; the test company is taken to be a wholly ‑ owned subsidiary of one of those other companies.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended by No 97 of 2008, effective Sch 1 (items 3–12) and Sch 3 (items 44–173, 189): 3 Oct 2008 (s 2(1) items 2, 3–5)

s 719-25 — Head company, subsidiary members and members of a MEC group

(1) The head company of a * MEC group is worked out under section 719 ‑ 75. (2) The remaining members of the group are the subsidiary members of the group. (3) The members of a * MEC group are the * head company of the group and the * subsidiary members of the group.

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 719-30 — Treating entities as wholly ‑ owned subsidiaries by disregarding employee shares

(1) The object of this section is to ensure that an entity is not prevented from being a * wholly ‑ owned subsidiary of another entity, just because there are minor holdings of * membership interests in an entity issued under * arrangements for employee shareholdings. (2) For the purposes of this Division, in determining whether an entity is a * wholly ‑ owned subsidiary of another entity, disregard: (a) particular * shares in a company if the shares are covered by subsection (3) and the total number of those shares is not more than 1% of the number of ordinary shares in the company; and (b) particular * membership interests in an entity if the membership interests are covered by subsection (5) and the total number of those membership interests is not more than 1% of the number of membership interests of that kind in the entity. (3) A * share or * membership interest in a company is covered by this subsection if: (a) the entity who holds the beneficial interest in the share or membership interest acquired that beneficial interest: (i) under an * employee share scheme; or (ii) by exercising a right, a beneficial interest in which was acquired under an employee share scheme; and (b) paragraphs 83A ‑ 105(1)(a) and (b) and subsection 83A ‑ 105(2) apply to the beneficial interest acquired under the scheme; and (c) in the case of a membership interest—the interest is part of a stapled security.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended by No 56 of 2007, effective 12 Apr 2007 | Amended by No 133 of 2009, effective Schedule 1 (items 1, 21–76, 86, 87): 14 Dec 2009 Schedule 2 (items 1–13, 15) and Schedule 3 (items 28–40, 44, 45): Royal Assent

s 719-35 — Treating entities held through non ‑ fixed trusts as wholly ‑ owned subsidiaries

(1) This section operates to ensure that an entity (the test entity ) is not prevented from being a * wholly ‑ owned subsidiary of a company, just because there is a trust that is not a * fixed trust interposed between the test entity and the company. (2) For the purposes of this Division, in determining whether the test entity is a * wholly ‑ owned subsidiary of the company, assume that the interposed trust is a * fixed trust and all its objects are beneficiaries.

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

s 719-40 — Special conversion event—potential MEC group

(1) A special conversion event happens at a particular time to a * potential MEC group derived from an * eligible tier ‑ 1 company of a * top company if: (a) at that time, the group is not a * MEC group as a result of a choice under section 719 ‑ 50; and (b) immediately before that time, a company is: (i) that eligible tier ‑ 1 company; and (ii) the * head company of a * consolidated group; and (c) at that time, one or more other companies become eligible tier ‑ 1 companies of the top company; and (d) immediately after that time, no * membership interests in the company mentioned in paragraph (b) are beneficially owned by another member of the potential MEC group derived from: (i) the company mentioned in paragraph (b); and (ii) the companies mentioned in paragraph (c); and (e) the company mentioned in paragraph (b) makes a choice in writing no later than the day mentioned in subsection (2): (i) specifying one or more of the companies mentioned in paragraph (c); and (ii) stating that a MEC group is to come into existence at that time as a result of the specified companies becoming eligible tier ‑ 1 companies of the top company; and (f) if: (i) a company specified in the choice was a member of another MEC group immediately before that time; and (ii) all of the eligible tier ‑ 1 companies in that other MEC group became eligible tier ‑ 1 companies of the top company at that time; each eligible tier ‑ 1 company in that other MEC group is specified in the choice. Note: The company mentioned in paragraph (b) must give the Commissioner a notice in the approved form containing information about the special conversion event (see sections 719 ‑ 78 and 719 ‑ 80). (2) The day mentioned in paragraph (1)(e) is: (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 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended 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) | Amended by No 41 of 2011, effective Schedule 1 (items 1–3): 1 Jan 2011 Schedule 1 (items 4–6) and Schedule 5 (items 25–29, 33, 36–50, 74–78, 80–145, 148–167, 173–175, 383–396, 400, 414–418): Royal Assent Schedule 5 (items 9, 18–20): 28 June 2011 Schedule 5 (items 51–54): 1 July 2011

s 719-45 — Application of sections 703 ‑ 20 and 703 ‑ 25

(1) For the purposes of this Division, if an item in section 703 ‑ 20 refers to an income year, an entity is covered by that item at a particular time if, and only if, that time is in that income year. (2) For the purposes of this Division, if a condition in item 1, 2 or 3 of the table in section 703 ‑ 25 refers to an income year, an entity meets that condition at a particular time if, and only if, that time is in that income year.

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

s 719-50 — Eligible tier ‑ 1 companies may choose to consolidate a potential MEC group

Making a choice to consolidate (1) If: (a) a * potential MEC group (the first group ) derived from 2 or more * eligible tier ‑ 1 companies of a * top company is in existence at the start of a particular day; and (b) that day is after 30 June 2002; and (c) none of those eligible tier ‑ 1 companies is already a member of a * MEC group or a * consolidated group; those eligible tier ‑ 1 companies, jointly, may make a choice in writing that the first group be consolidated on and after that day. If they do so, the choice must specify that day. Note: The provisional head company must give the Commissioner a notice in the approved form containing information about the group (see sections 719 ‑ 76 and 719 ‑ 80). Choice cannot be revoked or specified day amended (2) A choice cannot be revoked and the specification of the day cannot be amended. (3) A choice can be made no later than: (a) if the company mentioned in subsection (3A) is required to give the Commissioner its * income tax return for the income year during which that day occurs—the day on which that company gives the Commissioner that income tax return; or (b) otherwise—the last day in the period within which that company would be required to give the Commissioner such a return if it were required to give the Commissioner such a return. (3A) The company is: (a) in a case where subsection 719 ‑ 75(1) or (2) applies—the company that will be the * head company of the group as at the end of the income year; and (b) in a case where subsection 719 ‑ 75(3) applies—the company that will be the head company of the group immediately before the group ceased to exist. Company ceases to be an eligible tier ‑ 1 company before choice is given to the Commissioner (4) If: (a) as a result of a choice: (i) subsection 719 ‑ 75(1), (2) or (3) would apply to the * MEC group concerned in relation to the * income year of a company in which the specified day occurred; and (ii) 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 (iii) 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; and (b) another company (the other company ) that was an eligible tier ‑ 1 company at the start of the specified day ceased to exist at a time before: (i) the day on which the company mentioned in paragraph (a) gives the Commissioner its * income tax return for the income year during which the day specified in the choice occurs; or (ii) the last day in the period within which the company mentioned in paragraph (a) would be required to give the Commissioner such a return if it were required to give the Commissioner such a return; and (c) having regard to all relevant circumstances, it would be reasonable to conclude that the other company would have been a party to the choice if the other company had continued to exist; the other company is taken to have authorised the company that will be the head company as mentioned in subparagraph (a)(ii) or (iii): (d) to make the choice on behalf of the other company; and (e) to do, on behalf of the other company, anything else under: (i) subsection (1) of this section; or (ii) subsection 719 ‑ 60(1) or (3).

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) | 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 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 43 of 2019, effective Sch 2 (items 79–92): 1 July 2019 (s 2(1) item 1)

s 719-55 — When choice starts to have effect

A choice under section 719 ‑ 50 is taken to have started to have effect on the day specified in the choice.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Repealed and substituted 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 719-60 — Appointment of provisional head company

Appointment on formation of group—choice (1) If companies make a choice under section 719 ‑ 50, the choice must include an appointment, made jointly by the companies, of one of those companies to be the provisional head company of the * MEC group concerned. The appointment comes, or is taken to have come, into force at the time when the choice starts or started to have effect. Appointment on formation of group—special conversion event (2) If a * special conversion event happens to a * potential MEC group, the * eligible tier ‑ 1 companies that were the members of the MEC group that resulted from the event are taken to have appointed the company mentioned in paragraph 719 ‑ 40(1)(b) as the provisional head company of the * MEC group. The appointment is taken to have come into force when the event happened. Appointment after formation of group (3) If a * cessation event happens to the * provisional head company of a * MEC group, the * eligible tier ‑ 1 companies that are or were members of the MEC group immediately after the cessation event may make a choice in writing, jointly appointing one of those companies to be the provisional head company of the group. The appointment is taken to have come into force immediately after the cessation event. Qualifications for provisional head company (4) An appointment of a company under subsection (1) or (3) as the * provisional head company of a * MEC group has no effect unless, at the time the appointment comes into force, the company is qualified to be the * provisional head company of the MEC group under section 719 ‑ 65. Appointment remains in force until cessation event (5) The appointment of a company as the * provisional head company of a * MEC group remains in force until a * cessation event happens to the company. What is a cessation event? (6) A cessation event happens to a * provisional head company of a * MEC group if: (a) the company ceases to be qualified to be the * provisional head company of the group under section 719 ‑ 65; or (b) the company ceases to exist.

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 719-65 — Qualifications for the provisional head company of a MEC group

Qualifications for the provisional head company (1) A company is qualified to be the * provisional head company of a * MEC group if: (a) the company is an * eligible tier ‑ 1 company of the * top company; and (b) no * membership interests in the company are beneficially owned by another member of the group. (2) Subsection (1) has effect subject to subsection (3). Period during which new provisional head company must have been a member of the group (3) If: (a) a company (the new company ) is to be appointed as the * provisional head company of a * MEC group under subsection 719 ‑ 60(3); and (b) the appointment will come into force immediately after a * cessation event happens to the former provisional head company of the group; and (c) a company (the original company ) (which may be the former provisional head company) was appointed as the provisional head company of the group under subsection 719 ‑ 60(1) or (2); the new company is not qualified to be the provisional head company of the group unless the new company has been a member of the group at all times during the period: (d) beginning at whichever of the following times is applicable: (i) if the cessation event happened in the income year of the original company in which the group came into existence—the time when the group came into existence; (ii) in any other case—the start of the income year of the former provisional head company in which the cessation event happened; and (e) ending when the cessation event happened.

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 719-70 — Income year of new provisional head company to be the same as that of former provisional head company

If: (a) a company (the new company ) is appointed as the * provisional head company of a * MEC group under subsection 719 ‑ 60(3); and (b) the appointment comes into force immediately after a * cessation event happens to the former provisional head company of the group; then: (c) if, for the income year in which the cessation event happened, the former provisional head company had not adopted an accounting period in place of the financial year concerned—the new company is taken not to have adopted an accounting period in place of that financial year; or (d) if, for the income year in which the cessation event happened, the former provisional head company had adopted an accounting period in place of the financial year concerned—the new company is taken to have adopted an accounting period in place of that financial year that is the same as the accounting period adopted by the former provisional head company.

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

s 719-75 — Head company

Group in existence throughout income year (1) If: (a) a company is the * provisional head company of a * MEC group at the end of the income year of the company; and (b) the group was in existence throughout the income year; the company is the head company of the group at all times during the income year. Group comes into existence in income year (2) If: (a) a company is the * provisional head company of a * MEC group at the end of the income year of the company; and (b) the group is in existence at the end of the income year; and (c) the group came into existence in the income year; that company is the head company of the group at all times during the period: (d) beginning when the group came into existence; and (e) ending at the end of the income year. Group ceases to exist in income year (3) If: (a) a * MEC group ceases to exist in an income year of a company; and (b) the company was the * provisional head company of the group immediately before the group ceased to exist; that company is the head company of the group at all times during the period: (c) beginning at whichever is the later of: (i) the start of the income year; and (ii) the time the group came into existence; and (d) ending at the time when the group ceased to exist.

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