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30 Oct 06 Consolidation - Group Restructures

In a press release issued on 27 October 2006, the Minister for Revenue and Assistant Treasurer, Peter Dutton, announced a change to the consolidation regime to allow ongoing consolidated groups and multiple entry consolidated groups (MEC groups) to restructure with minimal tax consequences.

Under the consolidation regime, when a group restructures, for example by way of a de-merger, it can result in a consolidated group converting to a MEC group, or a MEC group converting to a consolidated group. Consequently, when a change in the type of consolidated group occurs:

  • the tax cost setting rules will not apply to the assets of the ongoing group members (and therefore certain capital gains and losses will not arise)
  • tax losses of the ongoing group will not be tested and the capital losses that are apportioned over five years will not become immediately available
  • the ongoing group's history will be transferred to the new group; and
  • certain notifications currently required to be given to the Commissioner of Taxation will be removed.

In addition, when a MEC group changes to a consolidated group, the existing integrity provisions will continue to apply.

The new rule will apply to conversions that occur on or after 27 October 2006.

For a copy of the Minister's press release, No 2006/076, 27 October 2006, go here


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