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22 Apr 13 Rights to future income

The ATO advises that last year the Government amended the income tax law affecting consolidated groups. The Tax Laws Amendment (2012 Measures No 2) Act 2012 modified the consolidation tax cost setting and rights to future income rules. The changes mean that the tax outcomes for consolidated groups are more consistent with the tax outcomes that arise when assets are acquired outside the consolidation regime.

The changes affecting a corporate acquisition will depend on the time when the acquisition took place. That is, different changes apply to acquisitions that took place before 12 May 2010, after 30 March 2011 and the intervening period.

As some of the changes operate with effect from 2002, the normal amendment period has been extended. Generally the ATO can amend an assessment of a company, other than a small business entity, within four years from the date of the notice of assessment. The Tax Laws Amendment (2012 Measures No 2) Act 2012 extends this period until 29 June 2014.

It is important to note that just because the four year amendment period for the relevant notice of assessment may have expired, it does not mean the changes do not apply. Consolidated groups may still need to make an amendment to their notice of assessment to give effect to the changes in the Tax Laws Amendment (2012 Measures No 2) Act 2012 up until 29 June 2014.

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