Document ID: chunk:federal_register_of_legislation:C2025C00014:section:177eb:p1
Version: federal_register_of_legislation:C2025C00014
Segment Type: section
Provision Reference: s 177EB (pt 1/2)
Character Range: 1638862–1641634

177EB  Cancellation of franking credits—consolidated groups

Expressions to have same meanings as in section 177EA and Income Tax Assessment Act 1997
 (1) Unless the contrary intention appears, expressions used in this section:
 (a) if those expressions are defined in section 177EA—have the same meanings as in that section (subject to subsection (10) of this section); and
 (b) otherwise—have the same meanings as in the Income Tax Assessment Act 1997.

This section and section 177EA do not limit each other
 (2) This section does not limit the operation of section 177EA, and section 177EA does not limit the operation of this section.

Application of section
 (3) This section applies if:
 (a) there is a scheme for a disposition of membership interests in an entity (the joining entity); and
 (b) as a result of the disposition, the joining entity becomes a subsidiary member of a consolidated group; and
 (c) a credit arises in the franking account of the head company of the group because of the joining entity becoming a subsidiary member of the group; and
 (d) having regard to the relevant circumstances of the scheme, it would be concluded that the person, or one of the persons, who entered into or carried out the scheme or any part of the scheme did so for a purpose (whether or not the dominant purpose but not including an incidental purpose) of enabling the credit referred to in paragraph (c) to arise in the head company's franking account.

Bare acquisition of membership interests
 (4) It is not to be concluded for the purposes of paragraph (3)(d) that a person entered into or carried out a scheme for a purpose mentioned in that paragraph merely because the person acquired membership interests in the joining entity.

Commissioner to determine no franking credit
 (5) The Commissioner may make, in writing, a determination that no credit is to arise in the head company's franking account because of the joining entity becoming a subsidiary member of the consolidated group. A determination does not form part of an assessment.

Effect of determination
 (6) A determination under subsection (5) has effect according to its terms.

Notice of determination
 (7) If the Commissioner makes a determination under subsection (5), the Commissioner must serve notice in writing of the determination on the head company.

Objections
 (9) If a taxpayer to whom a determination relates is dissatisfied with the determination, the taxpayer may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953.

Relevant circumstances
 (10) The relevant circumstances of a scheme include the following:
 (a) the extent and duration of the risks of loss, and the opportunities for profit or gain, from holding membership interests in