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Tax Consolidation: an update on emerging issues

Published on 22 Feb 2005 | Took place at Le Meridien at Rialto, Melbourne , VIC

Although Australia's internationally path-breaking tax consolidation legislation commenced on 1 July 2002, tax consolidation is currently a moveable feast. It has taken until December 2004 to introduce the final instalment of the law. The Assistant Treasurer's media release of 20 December 2004 announced an extension of time until 31 December 2005 for some of the 'irrevocable' elections by consolidated groups to be revoked.

This will cause many groups that have already lodged a consolidated return to revisit past decisions in the light of more recent developments. For example, just how robust are the tax losses for which a group has created an available fraction using 'irrevocable' value donations?

Problems are starting to emerge when consolidated groups sell a subsidiary member. How robust are the exit calculations for the member? It may have an unsuspected deferred tax liability, causing double tax, or assets for which there is no tax cost!

Tax practitioners are having difficulty coping with the torrent of materials issuing from the ATO, which released numerous rulings and determinations in late 2004, and has only just formed working parties with the profession to consider losses, exit from a consolidated group and foreign-owned MEC (multiple entry consolidated) groups.

The purpose of this seminar was to provide an update on the impact of the recent legislative changes to Consolidation and the impact of Consolidation tax rulings and determinations.

Get a 20% discount when you buy all the items from this event.

Individual sessions

Joining/Formation

Author(s):  Peter MURRAY

Issues covered in this paper include:

  • how will the new legislation and recent consolidation taxation rulings and determinations impact your ACA calculation?
  • unexpected outcomes on joining / forming a consolidated / MEC group
  • ATO risk reviews of consolidation projects.

This paper was also presented by Jenny Clarke at the Tax Consolidation seminar held in Sydney on 22 February 2005.

Materials from this session:

Losses

Author(s):  Andrew WOOLLARD

Issues covered in this paper include:

  • issues coming out of the losses working party
  • transferring losses to the consolidated group and implications for prior year amendments
  • revisiting irrevocable elections
  • new COT legislation
  • SBT and the Commissioner's discussion paper.

This paper was also presented by Geoff Kirk at the Tax Consolidation seminar held in Sydney on 22 February 2005.

Materials from this session:

Issues on exiting from a consolidated group

Author(s):  David ROMANS

Issues covered in this presentation include:

  • when does an entity exit? - special issues on liquidation and for MEC groups
  • a CGT event L5 if liabilities exceed the tax cost of assets - a problem with insolvent subsidiaries
  • assets which may not have a cost base on exit
  • what is the tax value of intra-group assets and liabilities when an entity leaves a group?
  • issues with merged and split assets and goodwill
  • issues with liabilities and the impact of IFRS, the interaction between s711-45(3) and (5)
  • if Division 149 applies after the formation of a group, what is its effect on the disposal of a subsidiary member with a pre-CGT factor?
  • when is the gain or loss of the head company on the disposal of membership interests
  • in subsidiary member on revenue or capital account.

This was also presented by Paul Abbey at the Tax Consolidation seminar held in Sydney on 22 February 2005.

Materials from this session: