Section FM 40 — Income Tax Act 2007: Losing eligibility or entitlement to be part of consolidated group

FM 40 Losing eligibility or entitlement to be part of consolidated group When this section applies (1) This section applies when a company is no longer eligible to be part of a consolidated group or, if it is not the nominated company, when it is no longer entitled to be in the same consolidated group as the nominated company. Effective date (2) Unless subsections (3) or (4) apply, the company is treated as leaving the consolidated group from the start of the income year in which the relevant event occurs, making it no longer— (a) eligible to be part of the consolidated group; or (b) if it is not the nominated company, entitled to be in the same consolidated group as the nominated company. First income year (3) Despite subsection (2), if a company becomes no longer eligible or entitled to be in the consolidated group in the same income year in which it joined the group, the company is treated as leaving the consolidated group on the day it joined the group. Notifying date (4) Despite subsections (2) and (3), the company may notify the Commissioner that it is leaving the consolidated group from the date on which its eligibility or its entitlement ended. For the notice to be effective, the company must— (a) provide the notice within 20 working days after the date on which the company’s eligibility or entitlement ended, although the Commissioner may agree to extend this period if it is reasonable to do so in the circumstances; and (b) provide part-year financial statements under section FM 14 . Anti-avoidance measure (5) A notice under this section is not valid if it is made in connection with an arrangement entered into for a purpose of enabling the company to leave a consolidated group so as to defeat the intent and application of the consolidation rules. When this subsection applies, the company is treated as leaving the consolidated group on the date on which its eligibility or entitlement ended. Defined in this Act: arrangement , Commissioner , company , consolidated group , consolidation rules , income year , nominated company , notice , notify , working day , Compare: 2004 No 35 s FD 8(3), (4), (6), (7)