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Part IVA and consolidated groups: Grazing on uncertainty
Published on 01 Sep 15 by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE
The decision of the Full Court of the Federal Court in Channel Pastoral Holdings Pty Ltd v FCT was the second of two decisions which have considered the interaction of Pt IVA (the general anti-avoidance provision) of the Income Tax Assessment Act 1936 and the tax consolidation regime (the first was FCT v Macquarie Bank Ltd). In Channel Pastoral, the court held that Pt IVA could apply to a scheme or an arrangement involving the formation of a tax consolidated group, and that the correct entity to which to issue a determination and corresponding assessment (or amended assessment) is the group member which would have derived the tax benefit had the consolidated group not been formed.
This article examines the case in detail, outlines a number of implications, and argues that there is still confusion as to who should be the subject of a determination and an assessment in these situations.