Long-awaited Tax consolidation measures released – 15 September 2017
On 11 September 2017, the long-awaited Exposure Draft legislation and a draft explanatory memorandum on improving the operation of the tax cost setting rules in tax consolidation was released for public consultation.
The six issues addressed being:
- Preventing a double benefit from arising in relation to deductible liabilities when an entity joins a consolidated group;
- Ensuring that deferred tax liabilities are disregarded;
- Removing anomalies that arise when an entity holding securitised assets joins or leaves a consolidated group;
- Preventing unintended benefits arising when foreign residents cease to hold membership interests in a joining entity in certain circumstances;
- Clarifying the outcomes that arise when an entity holding financial arrangements leaves a consolidated group; and
- Clarifying the treatment of intra-group liabilities when an entity leaves a consolidated group.
These measures address the concerns raised in the Board of Taxation’s 2013 post-implementation review of the tax consolidation rules.