The ATO on Thur 7.11.2013, released Practice Statement Law Administration PS LA 2013/5 to outline the ATO’s policy in relation to the collection of group tax liabilities from head companies of consolidated groups, member entities and entities that have left the group. The PS LA also deals with tax sharing arrangements and requirements for an entity to leave the group clear of certain liabilities.
Generally, the PS LA states that where the head company does not discharge a group liability by the due date (the head company’s due time), all entities that were members of the group for a part of the liability period become jointly and severally liable for that group liability, unless the group is covered by a tax sharing arrangement (TSA). The joint and several liability becomes due and payable 14 days after the Commissioner gives written notice to the entity or entities, and different group entities may have different due and payable dates.
In relation to TSAs, where a group is covered, a contributing member may have no liability or be liable for only a portion of the group debt, which does not become due and payable until 14 days after the Commissioner gives the entity written notice. However, the PS LA states that if the Commissioner determines that a particular group liability is not covered by a valid TSA (ie where the requirements are not met or the TSA is not produced as required under s 721-25(3) of the ITAA 1997), all the contributing members are jointly and severally liable for the debt and members may be pursued for payment.
[LTN 216, 7/11/13]