The ATO on Wed 15.1.2014, released Draft Taxation Determinations TD 2014/D2-D6 on the consolidation changes introduced by Pt 4 of Sch 3 to the Tax Laws Amendment (2012 Measures No 2) Act 2012 (rights to future income and residual tax cost setting rules) which are relevant in ascertaining whether the pre-rules, interim rules, or prospective rules apply in relation to an assessment of the head company of a consolidated group or multiple entry consolidated (MEC) group is resp-ect of an entity (the joining entity) when that entity joins the group.
Draft TD 2014/D2 states that sub-item 50(5) of Pt 4 of Sch 3 to the Tax Laws Amendment (2012 Measures No 2) Act 2012 only operates to apply the original 2002 law to the particulars that form part of a head company’s assessment for an income year in respect of the joining entity, if the head company’s latest notice of assessment for the income year, which relates to the application of s 701-55(6) of the original 2002 law, in respect of the joining entity, was served before 12 May 2010. That is, it states the conditions precedent to the operation of sub-item 50(5) cannot be met where the head company’s notice of assessment was served on or after that date.
Draft TD 2014/D3 states that para 50(3)(a) of Pt 4 of Sch 3 to the Tax Laws Amendment (2012 Measures No 2) Act 2012 does not apply to an assessment (the assessment for the later income year) in the circumstance where:
- the head company applied the original 2010 law in respect of the joining entity in calculating the tax loss for an income year (the earlier income year); and
- a nil assessment for that earlier income year was deemed to have been served on the head company by the Commissioner on or after 12 May 2010 and on or before 30 March 2011 that satisfied the conditions in para 50(3)(a); and
- the Commissioner was advised by the head company that the amount of the tax loss was subsequently reduced (but not to zero) and the Commissioner, in response to this advice, subsequently issued a document headed “Notice of Amended Assessment” (the notice) after 29 June 2012; and
- the head company considers whether the tax loss can be deducted in a later income year; and
- the head company’s income tax return for that later income year when lodged, is deemed to be an assessment (the assessment for the later income year), notice of which is deemed to have been served after 29 June 2012.
Draft TD 2014/D4 states that the interim rules continue to apply to all of the claims in a notice of assessment that satisfies the requirements of para 50(3)(a) of Pt 4 of Sch 3 to the Tax Laws Amendment (2012 Measures No 2) Act 2012, including any of those claims which are later altered in a notice of amended assessment served on or after 29 June 2012.
Draft TD 2014/D5 states that the rules will apply, by virtue of sub-item 50(6) of Pt 4 of Sch 3 to the Tax Laws Amendment (2012 Measures No 2) Act 2012,only to the extent that the subsequent amendment request alters an existing claim that relates to the application of s 701-55(6) of the original 2002 law in respect of the joining entity.
Draft TD 2014/D6 states that a new claim will not attract the application of the interim rules, since it was not claimed pursuant to a notice of assessment which satisfied the conditions in para 50(3)(a) of Pt 4 of Sch 3 to the Tax Laws Amendment (2012 Measures No 2) Act 2012.
DATE OF EFFECT: When the final Determinations are issued they are proposed to apply both before and after their date of issue.
COMMENTS are due by 21 February 2014. ATO contact for Draft TD 2014/D2: Melissa Bird – Tel: (02) 6058 7735; Fax: (02) 6058 7661; Email: melissa.bird@ato.gov.au. ATO contact for Draft TD 2014/D3: Julia Low – Tel: (08) 9268 5858; Fax: (08) 9268 5250; Email: julia.low@ato.gov.au. ATO contact for Draft TD 2014/D4 and Draft TD 2014/D6: Menike Bandara – Tel: (02) 9374 2053; Fax (02) 9374 2053; Email: menike.bandara@ato.gov.au. ATO contact for Draft TD 2014/D5: Lillian Howes – Tel: (03) 9275 2736; Fax: (03) 9275 2843; Email: lillian.howes@ato.gov.au.
[LTN 9, 15/1/14]