Commonwealth Numbered Acts

TAXATION LAWS AMENDMENT ACT (NO. 2) 2004 NO. 20, 2004 - SCHEDULE 8

Part 1—Making and revoking certain choices

Income Tax (Transitional Provisions) Act 1997

1 Subsection 701-5(1)

After "may", insert ", subject to subsection (3),".

2 Subsections 701-5(2) and (3)

Repeal the subsections, substitute:

Period for making choice

(2)

The choice must be made by the later of:

(a) the end of the period described in subsection 703-50(3) of the Income Tax Assessment Act 1997 for giving the Commissioner the choice under section 703-50 of that Act that the group is taken to be consolidated; and
(b) the end of 31 December 2004.

Agreement of other entities required in certain cases

(3)

If the choice is to be made after the end of the period mentioned in paragraph (2)(a) and before the end of the day mentioned in paragraph (2)(b), it cannot be made unless each entity in relation to which the conditions in subsection (5) are satisfied has agreed to it being made.

Choice is irrevocable in certain circumstances

(4)

The choice cannot be revoked unless:

(a) the revocation takes place before the end of 31 December 2004; and
(b) each entity in relation to which the conditions in subsection (5) are satisfied has agreed to the revocation.

(5)

For the purposes of subsections (3) and (4), the conditions are that:

(a) the entity (the leaving entity ) ceased to be a subsidiary member of the group before the choice was made (in a subsection (3) case) or before the revocation took place (in a subsection (4) case); and
(b) an asset became that of the leaving entity because section 701-1 (the single entity rule) of the Income Tax Assessment Act 1997 ceased to apply when the leaving entity ceased to be a subsidiary member; and
(c) the asset had become that of the head company because that section applied when a chosen transitional entity (whether or not the same entity as the leaving entity) became a subsidiary member.
3 Before Subdivision 707-C

Insert:

707-145 Certain choices to cancel the transfer of a loss may be revoked

Subsection 707-145(3) of the Income Tax Assessment Act 1997 does not apply if:

(a) the revocation of the choice mentioned in that subsection takes place before 1 January 2005; and
(b) each entity in relation to which the following conditions are satisfied has agreed to the revocation:
(i) the entity (the leaving entity ) ceased to be a subsidiary member of the group before the revocation took place;
(ii) an asset became that of the leaving entity because section 701-1 (the single entity rule) of the Income Tax Assessment Act 1997 ceased to apply when the leaving entity ceased to be a subsidiary member;
(iii) the asset had become that of the head company because that section applied when the joining entity to which Subdivision 707-A of that Act applies (whether or not the same entity as the leaving entity) became a subsidiary member.
4 Subsections 707-325(5) and (6)

Repeal the subsections, substitute:

Choice to work out available fraction using this section

(5)

The transferee may choose to use a fixed percentage (greater than 0% and not more than 100%) of the value donor's modified market value to work out the available fraction for the bundle. The transferee may do so only by the later of:

(a) the day on which it lodges its income tax return for the first income year for which it utilises (except in accordance with section 707-350) losses transferred to it under Subdivision 707-A of the Income Tax Assessment Act 1997 ; and
(b) the end of 31 December 2004.

(6)

The choice cannot be amended, or revoked, after 31 December 2004.

5 Subsection 707-327(5)

Repeal the subsection, substitute:

Choice to treat value donor's loss as included in bundle

(5)

A choice for the purposes of subsection (4):

(a) may be made only by the later of:
(i) the day on which the transferee lodges its income tax return for the first income year for which it utilises (except in accordance with section 707-350) losses transferred to it under Subdivision 707-A of the Income Tax Assessment Act 1997 ; and
(ii) the end of 31 December 2004; and
(b) cannot be revoked after 31 December 2004.
6 Subsection 707-328A(4)

Repeal the subsection, substitute:

Choice

(4)

A choice for the purposes of paragraph (1)(e):

(a) may be made only by the later of:
(i) the day on which the transferee lodges its income tax return for the first income year for which it utilises (except in accordance with section 707-350) losses transferred to it under Subdivision 707-A of the Income Tax Assessment Act 1997 ; and
(ii) the end of 31 December 2004; and
(b) cannot be amended, or revoked, after 31 December 2004.
7 Subsections 707-350(5) and (6)

Repeal the subsections, substitute:

Making choice

(5)

The transferee may choose that this section apply to the utilisation for any income year of all losses (of any sort) in the bundle that meet the conditions in paragraphs (1)(a), (b), (c) and (d). The transferee may do so only by the later of:

(a) the day on which it lodges its income tax return for the first income year for which it could utilise any losses transferred to it under Subdivision 707-A of the Income Tax Assessment Act 1997 (as described in subsection (1) or otherwise); and
(b) the end of 31 December 2004.

When choice has effect

(6)

The choice has effect for that income year and all later income years (and cannot be revoked after 31 December 2004).

8 After section 719-305

Insert:

719-310 Certain choices may be revoked

Subsection 719-325(7) of the Income Tax Assessment Act 1997 does not apply if the revocation of the choice mentioned in that subsection takes place before 1 January 2005.

Part 2—Research and development

Income Tax Assessment Act 1936

9 Section 73BAA

Omit ", 73BAC, 73BAD, 73BAE and", substitute "to".

10 After section 73BAB

Insert:

73BABA History for purposes of eligibility for tax offset: joining entity

If:

(a) a company becomes a subsidiary member of a consolidated group or MEC group; and
(b) things happening in relation to the company before it became a subsidiary member are, because of section 701-5 (the entry history rule) of the Income Tax Assessment Act 1997 , taken into account as things happening in relation to the head company of the group in applying paragraph 73J(1)(c) or (d) of this Act to determine for the head company core purposes whether the head company is eligible to choose a tax offset;

the things happening are not taken into account as mentioned in paragraph (b).

Note: The heading to section 73BAC is altered by inserting "for purposes of sections 73P to 73Z" after "history".

11 After section 73BAC

Insert:

73BACA History for purposes of eligibility for tax offset: leaving entity

If:

(a) a company ceases to be a subsidiary member of a consolidated group or MEC group; and
(b) while the company was a subsidiary member, things happened in relation to an entity with which, if section 701-1 (the single entity rule) of the Income Tax Assessment Act 1997 were disregarded, the company would have been grouped (within the meaning of section 73L of this Act); and
(c) those things would, if section 701-1 of the Income Tax Assessment Act 1997 were disregarded, have been taken into account in applying paragraph 73J(1)(c) or (d) of this Act to determine whether the company is eligible to choose a tax offset; and
(d) the things are not also things that, because of section 701-40 (the exit history rule) of the Income Tax Assessment Act 1997 , are taken into account as things happening in relation to an eligible asset etc. (within the meaning of that section) of the company in applying paragraph 73J(1)(c) or (d) of this Act to determine for the entity core purposes whether the company is eligible to choose a tax offset;

the things are taken into account in applying paragraph 73J(1)(c) or (d) of this Act to determine whether the company is eligible to choose a tax offset.

Note: The heading to section 73BAD is altered by inserting "for purposes of sections 73P to 73Z" after "expenditure".

Part 3—Technical corrections

Income Tax Assessment Act 1997

12 Paragraph 721-25(3)(b)

Omit "approved form", substitute " ^* approved form".

Income Tax (Transitional Provisions) Act 1997

13 Division 707 (heading)

Repeal the heading, substitute:

Part 4—Application of amendments
14 Application of amendments made by this Schedule

The amendments made by this Schedule apply on and after 1 July 2002.