Document ID: chunk:federal_register_of_legislation:C2024C00267:section:3:p13
Version: federal_register_of_legislation:C2024C00267
Segment Type: section
Provision Reference: s 3 (pt 13/31)
Character Range: 640003–642778

this Division allows the head company to prevent the entity from being a subsidiary member of the group, for a transitional period.

Subdivision 701D‑B—Rules allowing transitional foreign loss makers to remain outside consolidated group

Table of sections
701D‑10 Transitional foreign loss maker not member of group if certain conditions satisfied
701D‑15 Choice to apply transitional rules to entity

701D‑10  Transitional foreign loss maker not member of group if certain conditions satisfied
 (1) The Income Tax Assessment Act 1997 and this Act have effect as if an entity (the transitional foreign loss maker) is not a subsidiary member of a consolidated group at a particular time (the transitional time) if:
 (a) the group came into existence at a particular time (the formation time) before 1 July 2004; and
 (b) apart from this section, the transitional foreign loss maker would be a subsidiary member of the group at the transitional time; and
 (c) the transitional time is not later than 3 years after the formation time; and
 (d) the head company of the group has made a choice under section 701D‑15 to apply this section to the transitional foreign loss maker; and
 (e) the continuous ownership condition in subsection (2) is satisfied; and
 (f) the foreign loss condition in subsection (3) is satisfied; and
 (g) the no‑subsidiary condition in subsection (4) is satisfied.

Continuous ownership condition
 (2) The continuous ownership condition is satisfied if the transitional foreign loss maker was a wholly‑owned subsidiary of the entity that became the head company of the group throughout the period:
 (a) beginning at the start of 1 July 2002; and
 (b) ending at the transitional time.

Foreign loss condition
 (3) The foreign loss condition is satisfied if:
 (a) the transitional foreign loss maker incurred an overall foreign loss (as defined in former section 160AFD of the Income Tax Assessment Act 1936) in respect of the 2001‑02 income year or an earlier income year; and
 (b) the amount of the overall foreign loss has not been fully taken into account under one or more applications of former section 160AFD of the Income Tax Assessment Act 1936 to the transitional foreign loss maker in relation to an income year or income years ending before the transitional time; and
 (c) assuming that the transitional foreign loss maker had become a subsidiary member of a consolidated group at the formation time, as a result all or part of the overall foreign loss would have been transferred at that time to the head company of the group under Division 707 of the Income Tax Assessment Act 1997.

No‑subsidiary condition
 (4) The no‑subsidiary condition is satisfied if, at the transitional time:
 (a) the transitional foreign loss maker does not hold any