• Service: Tax, Corporate Tax
  • Type: Regulatory update
  • Date: 3/12/2013

Tax Insights

KPMG's analysis of tax issues and developments.

Graem McClelland

Graem McClelland
Director, Tax

+61 2 9335 8677

Closing loopholes in the consolidation regime 

by Graem McClelland, Corporate Tax Specialist

To protect the corporate tax base from erosion and loopholes, changes to the Australian income tax consolidation regime are to proceed as announced from 14 May 2013 with a net financial impact to the forward estimates of $540m in additional Government revenue.

Announced as part of the May 2013 Federal Budget, the changes will implement the recommendations contained in the Board of Taxation reports. These include:


  • Limiting the application of the tax cost setting rules where membership interests are regarded as non taxable Australian property under capital gains tax (CGT) rules to situations where:
    • there has been a change in the underlying majority beneficial ownership of the membership interests
    • there was no such change, but a foreign entity or group recently acquired the membership interests within the previous 12 months.


  • Treating deductible liabilities (to which an allocable cost amount (ACA) entry Step 2 amount applies) following the joining time as:
    • assessable income over a 12 month period where the deductible liability is a current liability for accounting purposes
    • assessable income over a 48 month period where the deductible liability is a non-current liability for accounting purposes.


  • Preventing double benefits which arise when an encumbered asset, whose market value has been reduced due to the intra-group creation of rights over the encumbered asset, is sold by the consolidated group.


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