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'The con' - broken bits in the income tax consolidation rules paper


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.

Author profile:

Duncan Baxter
Duncan is a Partner at Blake Dawson. He was previously a Partner in the International Tax Group of a global accounting firm. Duncan served as one of the three private sector representatives on the Federal Government’s Tax Design Review Panel. Current at 05 May 2009 Click here to expand/collapse more articles by Duncan R C BAXTER.

This was presented at Western Australian Annual Convention.

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