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INCOME TAX ASSESSMENT ACT 1997 - SECT 709.165

Subsidiary member is former exempting entity

             (1)  This section operates if:

                     (a)  the * head company of a * consolidated group is neither an exempting entity nor a * former exempting entity; and

                     (b)  a * corporate tax entity becomes a * subsidiary member of the group at a time (also the joining time ); and

                     (c)  the entity is a * former exempting entity at the joining time.

             (2)  These rules apply to the * consolidated group.

 

Rules applying to * consolidated group

Item

Rule

1

The * head company becomes a * former exempting entity at the joining time

2

The * head company has both a * franking account and an * exempting account

3

If the * subsidiary member's * exempting account has an * exempting surplus at the joining time:

(a) a debit equal to that surplus arises in that account at the joining time; and

(b) a credit equal to that surplus arises in the exempting account of the * head company at the joining time

4

If the * subsidiary member's * exempting account has an * exempting deficit at the joining time:

(a) a credit equal to that deficit arises in that account at the joining time; and

(b) a debit equal to that deficit arises in the subsidiary's * franking account just before the joining time

5

The * subsidiary member's * exempting account does not operate during the period:

(a) starting just after the joining time; and

(b) ending when the entity ceases to be a subsidiary member of the group

6

Item 1 of the table in section 208- 115 does not apply to the * head company

7

Item 1 of the table in section 208-120 does not apply to the * head company

8

Item 1 of the table in section 208-130 does not apply to the * head company

9

Item 1 of the table in section 208-145 does not apply to the * head company

Note 1:       Any surplus in the subsidiary's franking account will be transferred to the head company's franking account: see subsection 709-60(2).

Note 2:       If the subsidiary's franking account is in deficit, it will be liable for franking deficit tax: see subsection 709-60(3). This deficit may be increased by item 4 in the table in subsection (2).

Note 3:       The subsidiary's franking account does not operate while it is a member of the group: see section 709- 65.



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