Published on 11 Aug 07
by WESTERN AUSTRALIAN DIVISION, THE TAX INSTITUTE
Various aspects of the income tax consolidation rules in Part 3-90 of the Income Tax Assessment Act 1997 (Cth) still do not work properly. This paper focusses on a number of these aspects, including:
- the operation of the company loss recoupment rules as loss transfer tests
- the modifications to the 'same business test' for income tax consolidated groups
- peculiar outcomes under the 'single entity rule'
- the private ruling system and restructures of consolidated groups
- weaknesses in the Tax Sharing Agreement and 'clear exit payment' rules
- anomalies in relation to CGT event L5 and the acquisition of a consolidated group
- the exclusion from CGT event J1 in relation to entities that leave:
- income tax consolidated groups
- multiple entry consolidated (MEC) groups
These aspects also provide a context within which the paper will consider a selection of recent legislative amendments and ATO rulings.