Document ID: chunk:federal_register_of_legislation:C2010C00690:clause:1_2:p1
Version: federal_register_of_legislation:C2010C00690
Segment Type: clause
Provision Reference: sch 1 cl 2 (pt 1/11)
Character Range: 2342–5184

2  After Part 3‑45
Insert:

Part 3‑90—Consolidated groups

Division 700—Guide and objects

Table of sections

Guide

700‑1 What this Part is about
700‑5 Overview of this Part

Objects

700‑10 Objects of this Part

Guide

700‑1  What this Part is about

      This Part allows certain groups of entities to be treated as single entities for income tax purposes.
      Following a choice to consolidate, subsidiary members are treated as part of the head company of the group rather than as separate income tax identities. The head company inherits their income tax history when they become subsidiary members of the group. On ceasing to be subsidiary members, they take with them an income tax history that recognises that they are different from when they became subsidiary members.
      This is supported by rules that:

                (a) set the cost for income tax purposes of assets that subsidiary members bring into the group; and
                (b) determine the income tax history that is taken into account when entities become, or cease to be, subsidiary members of the group; and
                (c) deal with the transfer of tax attributes such as losses and franking credits to the head company when entities become subsidiary members of the group.

700‑5  Overview of this Part

 (1) The single entity rule determines how the income tax liability of a consolidated group will be ascertained. The basic principle is contained in the Core Rules in Division 701.

 (2) Essentially, a consolidated group consists of an Australian resident head company and all of its Australian resident wholly‑owned subsidiaries (which may be companies, trusts or partnerships). Special rules apply to foreign‑owned groups with no single Australian resident head company.

 (3) An eligible wholly‑owned group becomes a consolidated group after notice of a choice to consolidate is given to the Commissioner.

 (4) This Part also contains rules which set the cost for income tax purposes of assets of entities when they become subsidiary members of a consolidated group and of membership interests in those entities when they cease to be subsidiary members of the group.

 (5) Certain tax attributes (such as losses and franking credits) of entities that become subsidiary members of a consolidated group are transferred under this Part to the head company of the group. These tax attributes remain with the group after an entity ceases to be a subsidiary member.

[This is the end of the Guide]

Objects

700‑10  Objects of this Part

  The objects of this Part are:
 (a) to prevent double taxation of the same economic gain realised by a consolidated group; and
 (b) to prevent a double tax benefit being obtained from an economic loss realised by a consolidated group; and
 (c) to provide a systematic solution to the prevention of