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House of Representatives

New Business Tax System (Consolidation) Bill (No. 1) 2002

New Business Tax System (Consolidation) Act (No. 1) 2002

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)


The following abbreviations and acronyms are used throughout this explanatory memorandum.

Abbreviation Definition
AASB Australian Accounting Standards Board
A Platform for Consultation Review of Business Taxation: A Platform for Consultation
A Tax System Redesigned Review of Business Taxation: A Tax System Redesigned
ADF approved deposit fund
ASIC Australian Securities and Investment Commission
ATO Australian taxation Office
BAS business activity statement
CFC controlled foreign company
CGT capital gains tax
Commissioner Commissioner of Taxation
COT continuity of ownership test
December 2000 exposure draft New Business Tax System (Consolidation) Bill 2000 exposure draft
February 2002 exposure draft New Business Tax System (Consolidation) Bill 2002 exposure draft
GDP gross domestic product
ESAS Employee Share Acquisition Scheme
FBT fringe benefits tax
FIF foreign investment fund
GIC general interest charge
ITAA 1936 Income Tax Assessment Act 1936
ITAA 1997 Income Tax Assessment Act 1997
ITRA 1986 Income Tax Rates Act 1986
MEC multiple entry consolidated
PAYG pay as you go
PDF pooled deposit fund
PST pooled superannuation trust
RSA retirement savings account
SAC Statement of Accounting Concept
SAP substituted accounting period
SBT same business test
TAA 1953 Taxation Administration Act 1953
TSA tax sharing agreement
Thin Capitalisation legislation New Business Tax System (Thin Capitalisation) Act 2001

Explanatory Memorandum
Table of contents
  General outline and financial impact
  Chapter 1 - Overview of consolidation
  Chapter 2 - Core rules
  Chapter 3 - Membership rules
  Chapter 4 - Resident wholly-owned subsidiaries of a common foreign holding company
  Chapter 5 - Cost setting rules
  Chapter 6 - Transferring losses to a consolidated group
  Chapter 7 - Determining whether a transferred loss can be used by a consolidated group
  Chapter 8 - Limiting the use of transferred losses by a consolidated group
  Chapter 9 - Transitional concessions for losses
  Chapter 10 - Franking accounts in consolidated groups
  Chapter 11 - Liability for the payment of tax where a head company fails to pay on time
  Chapter 12 - Pay as you go instalments
  Chapter 13 Removal of grouping provisions
  Chapter 14 - Regulation impact statement

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