Issue
Can the date specified in a choice to form a consolidated group under section 703-50 of the Income Tax Assessment Act 1997 (ITAA 1997) be changed, if the group was ineligible to consolidate from the original date notified to the Commissioner?
Decision
No, the original choice to form a consolidated group would be ineffective.
Facts
A company provided the Commissioner with its choice to form a consolidated group with effect from 1 July 2002. It has since been discovered that the group was in fact ineligible to consolidate from the date originally specified in the notice. The head company wishes to change the date of effect to a later date.
Reasons for Decision
Subsection 703-50(1) of the ITAA 1997 sets out the conditions for making a choice to consolidate: • the choice must be made in the approved form; • there must be a consolidatable group on the day specified in the choice; • the choice must be provided to the Commissioner within the period specified in subsection 703-50(3) of the ITAA 1997; and • the company making the choice must be the head company of the consolidatable group on the day specified.
Where any of the conditions in subsection 703-50(1) of the ITAA 1997 are not satisfied, the choice made by the company will be ineffective.
Where a choice to consolidate has been made in accordance with subsection 703-50(1) of the ITAA 1997 but the Commissioner is satisfied that the choice contains information that is incorrect in a material particular, the combined effect of subsections 703-50(5) and (6) of the ITAA 1997 is that the choice has no effect unless the Commissioner gives the company written notice that the choice is effective. However, the Commissioner is not able to give effect under subsection 703-50(6) to a notice which does not satisfy the conditions of subsection 703-50(1) of the ITAA 1997.
In nominating 1 July 2002 as the date of effect, the requirements in subsection 703-50 (1) of the ITAA 1997 were not satisfied because there was no consolidatable group at that time. Note: Section 703-50 has been amended by Tax Laws Amendment (2010 Measures No. 1) Act 2010 (No. 56 of 2010)(Schedule 5, Part 18) with effect from 1 July 2002. However, the head company may make a choice to apply the previous law if the date of consolidation is prior to 10 February 2010. This ATO ID continues to be a precedential view in respect of previous section 703-50 of ITAA 1997. The amended section 703-50 of ITAA 1997 no longer requires a choice to consolidate to be given to the Commissioner, instead the choice to consolidate must be made in writing and section 703-58 of the ITAA 1997 requires the relevant information about the choice to be notified to the Commissioner in the approved form. Subsections 703-50(5) and (6) of ITAA 1997 have been repealed.