Tax Laws Amendment (Loss Recoupment Rules and Other Measures) Act 2005 (Cth)

Tax Laws Amendment (Loss Recoupment Rules and Other Measures) Act 2005 No. 147, 2005 An Act to amend the law relating to taxation, and for related purposes Contents 1 Short title 2 Commencement 3 Schedule(s) Schedule 1—Loss recoupment rules for companies etc. Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Schedule 2—Foreign residents' income with an underlying foreign source Part 1—Main amendment Income Tax Assessment Act 1997 Part 2—Other amendments Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Taxation Administration Act 1953 Part 3—Application and transitional Schedule 3—Denying deductions for illegal activity Income Tax Assessment Act 1997 Schedule 4—Film copyright Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Schedule 5—Employee share schemes Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Income Tax (Transitional Provisions) Act 1997 Taxation Laws Amendment Act (No. 3) 2003 Schedule 6—Superannuation guarantee charge Income Tax Assessment Act 1997 Superannuation Guarantee (Administration) Act 1992 Schedule 7—Superannuation on back payments Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Superannuation Guarantee (Administration) Act 1992 Tax Laws Amendment (Loss Recoupment Rules and Other Measures) Act 2005 No. 147, 2005 An Act to amend the law relating to taxation, and for related purposes [Assented to 14 December 2005] The Parliament of Australia enacts: 1 Short title This Act may be cited as the Tax Laws Amendment (Loss Recoupment Rules and Other Measures) Act 2005. 2 Commencement (1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms. Commencement information Column 1 Column 2 Column 3 Provision(s) Commencement Date/Details 1. Sections 1 to 3 and anything in this Act not elsewhere covered by this table The day on which this Act receives the Royal Assent. 14 December 2005 2. Schedules 1 to 4 The day on which this Act receives the Royal Assent. 14 December 2005 3. Schedule 5, items 1 to 15 The day on which this Act receives the Royal Assent. 14 December 2005 4. Schedule 5, item 16 Immediately after the commencement of the provision(s) covered by table item 3. 14 December 2005 5. Schedule 5, items 17 to 20 The day on which this Act receives the Royal Assent. 14 December 2005 6. Schedules 6 and 7 The day on which this Act receives the Royal Assent. 14 December 2005 Note: This table relates only to the provisions of this Act as originally passed by the Parliament and assented to. It will not be expanded to deal with provisions inserted in this Act after assent. (2) Column 3 of the table contains additional information that is not part of this Act. Information in this column may be added to or edited in any published version of this Act. 3 Schedule(s) Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms. Schedule 1—Loss recoupment rules for companies etc. Income Tax Assessment Act 1936 1 After subsection 80B(8) Insert: (8A) A person is not prevented from: (a) beneficially owning shares in a company; or (b) having the right to exercise voting power in a company; or (c) having the right to receive any dividends that may be paid by a company; or (d) having the right to receive any distribution of capital of a company; merely because: (e) the company is or becomes: (i) an externally‑administered body corporate within the meaning of the Corporations Law (as set out in section 82 of the Corporations Act 1989); or (ii) a body with a similar status, under the Companies Code of the relevant State or a foreign law, to an externally‑administered body corporate; or (f) either: (i) a provisional liquidator is appointed to the company under section 472 of the Corporations Law (as set out in section 82 of the Corporations Act 1989); or (ii) a person with a similar status, under the Companies Code of the relevant State or a foreign law, to a provisional liquidator is appointed to the company. (8B) A company (the stakeholding company) is not prevented from: (a) beneficially owning shares, or any other interests in shares, in another company; or (b) having the right to exercise voting power in another company either directly or indirectly; or (c) having the right to receive, either directly or indirectly, any dividends that may be paid by another company; or (d) having the right to receive, either directly or indirectly, any distribution of capital of another company; merely because: (e) the stakeholding company is or becomes: (i) an externally‑administered body corporate within the meaning of the Corporations Law (as set out in section 82 of the Corporations Act 1989); or (ii) a body with a similar status, under the Companies Code of the relevant State or a foreign law, to an externally‑administered body corporate; or (f) either: (i) a provisional liquidator is appointed to the stakeholding company under section 472 of the Corporations Law (as set out in section 82 of the Corporations Act 1989); or (ii) a person with a similar status, under the Companies Code of the relevant State or a foreign law, to a provisional liquidator is appointed to the stakeholding company. 2 After section 160ZNR Insert: 160ZNRA Companies in liquidation (1) For the purposes of a test, an entity is not prevented from: (a) beneficially owning shares in a company; or (b) having the right to exercise, controlling, or being able to control, voting power in a company; or (c) having the right to receive any dividends that a company may pay; or (d) having the right to receive any distribution of capital of a company; merely because: (e) the company is or becomes: (i) an externally‑administered body corporate within the meaning of the Corporations Law (as set out in section 82 of the Corporations Act 1989); or (ii) an entity with a similar status, under the Companies Code of the relevant State or a foreign law, to an externally‑administered body corporate; or (f) either: (i) a provisional liquidator is appointed to the company under section 472 of the Corporations Law (as set out in section 82 of the Corporations Act 1989); or (ii) a person with a similar status, under the Companies Code of the relevant State or a foreign law, to a provisional liquidator is appointed to the company. (2) For the purposes of a test, a company (the stakeholding company) is not prevented from: (a) beneficially owning shares in another company, or any other interest in another entity; or (b) having the right to exercise, controlling, or being able to control, voting power in another company or any other entity; or (c) having the right to receive any dividends that another company or any other entity may pay; or (d) having the right to receive any distribution of capital of another company or any other entity; merely because: (e) the stakeholding company is or becomes: (i) an externally‑administered body corporate within the meaning of the Corporations Law (as set out in section 82 of the Corporations Act 1989); or (ii) an entity with a similar status, under the Companies Code of the relevant State or a foreign law, to an externally‑administered body corporate; or (f) either: (i) a provisional liquidator is appointed to the stakeholding company under section 472 of the Corporations Law (as set out in section 82 of the Corporations Act 1989); or (ii) a person with a similar status, under the Companies Code of the relevant State or a foreign law, to a provisional liquidator is appointed to the stakeholding company. 3 At the end of subsection 160ZNSK(1) Add: ; (g) 160ZNRA (which deals with companies in liquidation). Income Tax Assessment Act 1997 4 Subsection 4‑15(2) (table item 1) Omit "continue to carry on the same business", substitute "satisfy the same business test". 5 Subsection 25‑35(5) (table item 1) Omit "carried on the same business", substitute "satisfied the same business test". 6 Section 36‑25 (table item 1 in the table headed "Tax losses of companies") Omit "carried on the same business", substitute "satisfied the same business test". 7 Section 36‑25 (table item 2 in the table headed "Tax losses of companies") Repeal the table item, substitute: 2. A company wants to deduct a tax loss. It cannot do so unless: Subdivision 165‑A • the same people owned the company during the loss year, the income year and any intervening year; and • no person controlled the company's voting power at any time during the income year who did not also control it during the whole of the loss year and any intervening year; or the company has satisfied the same business test. 8 Section 102‑30 (table item 4) Omit "carried on the same business", substitute "satisfied the same business test". 9 Section 102‑30 (table item 5) Repeal the table item, substitute: 5 A company It cannot apply a net capital loss unless: Subdivision 165‑CA • the same people owned the company during the loss year, the income year and any intervening year; and • no person controlled the company's voting power at any time during the income year who did not also control it during the whole of the loss year and any intervening year; or the company has satisfied the same business test. 10 Subsection 125‑60(2) After "in a company", insert "that is the *head entity of a *demerger group". 11 Subparagraph 125‑60(3)(a)(i) Repeal the subparagraph. 12 Section 165‑5 Repeal the section, substitute: 165‑5 What this Subdivision is about A company cannot deduct a tax loss unless: (a) it has the same owners and the same control throughout the period from the start of the loss year to the end of the income year; or (b) it satisfies the same business test by carrying on the same business, entering into no new kinds of transactions and conducting no new kinds of business. (Companies whose total income for the income year is more than $100 million cannot satisfy the same business test for that year.) 13 Paragraph 165‑10(b) Omit "carrying on the same business", substitute "satisfying the same business test". 14 Section 165‑10 (note) Repeal the note, substitute: Note 1: In the case of a widely held or eligible Division 166 company, Subdivision 166‑A modifies how this Subdivision applies, unless the company chooses otherwise. Note 2: Companies whose total income for an income year is more than $100 million cannot meet the condition in section 165‑13 for that year: see section 165‑212A. 15 At the end of subsection 165‑12(1) Add: Note: See section 165‑255 for the rule about incomplete test periods. 16 Subsection 165‑12(6) Omit "at the beginning of", substitute "at any time during". 17 After subsection 165‑12(7) Insert: (7A) If the company is: (a) a *non‑profit company; or (b) a *mutual affiliate company; or (c) a *mutual insurance company; during the whole of the *ownership test period, the conditions in subsections (3) and (4) are taken to have been satisfied by the company. 18 Section 165‑13 (heading) Repeal the heading, substitute: 165‑13 Alternatively, the company must satisfy the same business test 19 Subsection 165‑13(1) Omit "the company" (first occurring), substitute "a company (other than a company covered by section 165‑212A)". 20 Subsection 165‑13(1) (note) Omit "Note", substitute "Note 1". 21 At the end of subsection 165‑13(1) Add: Note 2: Companies whose total income for the income year is more than $100 million cannot meet the condition in this section for that year: see section 165‑212A. 22 Section 165‑15 (heading) Repeal the heading, substitute: 165‑15 The same people must control the voting power, or the company must satisfy the same business test 23 At the end of subsection 165‑15(1) Add: Note: A person can still control the voting power in a company that is in liquidation etc.: see section 165‑250. 24 At the end of subsection 165‑15(2) Add: Note: Companies whose total income for the income year is more than $100 million cannot satisfy the same business test for that year: see section 165‑212A. 25 At the end of section 165‑23 Add: (Companies whose total income for an income year is more than $100 million cannot satisfy the same business test for that year.) 26 Section 165‑30 Repeal the section, substitute: 165‑30 Flow chart showing the application of this Subdivision Note: If the company was a partner during the income year, special rules apply to calculating a notional loss or notional taxable income. 27 Section 165‑35 (heading) Repeal the heading, substitute: 165‑35 On a change of ownership, unless the company satisfies the same business test 28 Section 165‑35 (notes) Repeal the notes, substitute: Note 1: For the same business test, see Subdivision 165‑E. Note 2: In the case of a widely held or eligible Division 166 company, Subdivision 166‑B modifies how this Subdivision applies, unless the company chooses otherwise. Note 3: Companies whose total income for the income year is more than $100 million cannot satisfy the same business test for the rest of the year: see section 165‑212A. 29 Subsection 165‑37(3) Omit "at the beginning of", substitute "at any time during". 30 After subsection 165‑37(4) Insert: (4A) If the company is: (a) a *non‑profit company; or (b) a *mutual affiliate company; or (c) a *mutual insurance company; during the whole of the *ownership test period, the conditions in paragraphs (1)(b) and (c) are taken to have been satisfied by the company. 31 Section 165‑40 (heading) Repeal the heading, substitute: 165‑40 On a change of control of the voting power in the company, unless the company satisfies the same business test 32 At the end of subsection 165‑40(1) Add: Note: A person can still control the voting power in a company that is in liquidation etc.: see section 165‑250. 33 At the end of subsection 165‑40(2) Add: Note: Companies whose total income for the income year is more than $100 million cannot satisfy the same business test for the rest of the year: see section 165‑212A. 34 At the end of subsection 165‑45(3) Add: Note: See section 165‑255 for the rule about incomplete periods. 35 Subsection 165‑45(4) (notes) Repeal the notes, substitute: Note 1: For the same business test, see Subdivision 165‑E. Note 2: See section 165‑225 for a special alternative to this section. Note 3: Companies whose total income for the income year is more than $100 million cannot satisfy the same business test for the same business test period: see section 165‑212A. 36 Section 165‑93 Repeal the section, substitute: 165‑93 What this Subdivision is about In working out its net capital gain for an income year, a company cannot apply a net capital loss for an earlier income year unless: (a) it has the same owners and the same control from the start of the loss year to the end of the income year; or (b) it satisfies the same business test by carrying on the same business, entering into no new kinds of transactions and conducting no new kinds of business. (Companies whose total income for the income year is more than $100 million cannot satisfy the same business test for that year.) 37 Subsection 165‑96(1) Omit "or *net capital loss". 38 Subsection 165‑96(1) (note 1) Omit "or net capital loss". 39 Subsection 165‑96(1) (note 2) Omit "in the loss year or the income year", substitute "in the period from the start of the loss year to the end of the income year". 40 At the end of section 165‑99 Add: (Companies whose total income for an income year is more than $100 million cannot satisfy the same business test for that year.) 41 Section 165‑102 (heading) Repeal the heading, substitute: 165‑102 On a change of ownership, or of control of voting power, unless the company satisfies the same business test 42 Section 165‑102 (note) Repeal the note, substitute: Note: In the case of a widely held or eligible Division 166 company, Subdivision 166‑B modifies how this Subdivision applies, unless the company chooses otherwise. 43 At the end of section 165‑115 Add: (Companies whose total income for an income year is more than $100 million cannot satisfy the same business test for that year.) 44 At the end of subsection 165‑115B(4) Add: Note: Companies whose total income for an income year is more than $100 million cannot meet the condition in section 165‑13 for that year: see section 165‑212A. 45 At the end of subsection 165‑115BA(4) Add: Note: Companies whose total income for an income year is more than $100 million cannot meet the condition in section 165‑13 for that year: see section 165‑212A. 46 Subsection 165‑115C(3) Omit "at the reference time", substitute "at any time during the period from the reference time to the *test time". 47 After subsection 165‑115C(4) Insert: (4A) If the company is: (a) a *non‑profit company; or (b) a *mutual affiliate company; or (c) a *mutual insurance company; during the whole of the period from the reference time to the *test time, the test time is taken not to be a *changeover time in respect of the company because of the application of paragraphs (1)(b) and (c). 48 At the end of subsection 165‑115D(1) Add: Note: A person can still control the voting power in a company that is in liquidation etc.: see section 165‑250. 49 Subsection 165‑115L(4) Omit "at the reference time", substitute "at any time during the period from the reference time to the *test time". 50 At the end of section 165‑115L Add: (5) If the company is: (a) a *non‑profit company; or (b) a *mutual affiliate company; or (c) a *mutual insurance company; during the whole of the period from the reference time to the *test time, the test time is taken not to be an *alteration time in respect of the company because of the application of paragraphs (1)(b) and (c). 51 At the end of subsection 165‑115M(1) Add: Note: A person can still control the voting power in a company that is in liquidation etc.: see section 165‑250. 52 Section 165‑117 Repeal the section, substitute: 165‑117 What this Subdivision is about A company cannot deduct a bad debt unless: (a) if the debt was incurred in an earlier income year—the company had the same owners and the same control throughout the period from the day on which the debt was incurred to the end of the income year in which it writes off the debt as bad; or (b) if the debt was incurred in the current year—the company had the same owners and the same control during the income year both before and after the debt was incurred; or, if there has been a change of ownership or control, the company satisfies the same business test by carrying on the same business, entering into no new kinds of transactions and conducting no new kinds of business. (Companies whose total income for the income year is more than $100 million cannot satisfy the same business test for the second continuity period.) 53 Paragraph 165‑120(1)(c) Omit "carrying on the same business", substitute "satisfying the same business test". 54 Subsection 165‑120(1) (note 1) Repeal the note, substitute: Note 1: In the case of a widely held or eligible Division 166 company, Subdivision 166‑C modifies how this Subdivision applies, unless the company chooses otherwise. 55 At the end of subsection 165‑120(1) Add: Note 4: Companies whose total income for the current year is more than $100 million cannot meet the condition in section 165‑126 for the second continuity period: see section 165‑212A. 56 At the end of subsection 165‑123(1) Add: Note: See section 165‑255 for the rule about incomplete test periods. 57 Subsection 165‑123(6) Omit "at the beginning of", substitute "at any time during". 58 After subsection 165‑123(7) Insert: (7A) If the company is: (a) a *non‑profit company; or (b) a *mutual affiliate company; or (c) a *mutual insurance company; during the whole of the *ownership test period, the conditions in subsections (3) and (4) are taken to have been satisfied by the company. 59 Section 165‑126 (heading) Repeal the heading, substitute: 165‑126 Alternatively, the company must satisfy the same business test 60 Subsection 165‑126(1) Omit "the company" (first occurring), substitute "a company (other than a company covered by section 165‑212A)". 61 Subsection 165‑126(1) (note) Omit "Note", substitute "Note 1". 62 At the end of subsection 165‑126(1) Add: Note 2: Companies whose total income for the current year is more than $100 million cannot meet the condition in this section for the second continuity period: see section 165‑212A. 63 Section 165‑129 (heading) Repeal the heading, substitute: 165‑129 Same people must control the voting power, or the company must satisfy the same business test 64 At the end of subsection 165‑129(1) Add: Note: A person can still control the voting power in a company that is in liquidation etc.: see section 165‑250. 65 At the end of subsection 165‑129(2) Add: Note: Companies whose total income for the current year is more than $100 million cannot satisfy the same business test for the second continuity period: see section 165‑212A. 66 Paragraph 165‑132(1)(b) Omit "carrying on the same business", substitute "satisfying the same business test". 67 At the end of subsection 165‑132(1) Add: Note: Companies whose total income for the later income year is more than $100 million cannot satisfy the same business test for that year: see section 165‑212A. 68 At the end of subsection 165‑180(1) Add: Example: The Commissioner may treat a person as not having beneficially owned redeemable shares at a particular time if the conditions in subsections (2) and (3) are met in respect of those shares. 69 Section 165‑195 Repeal the section. 70 Subsection 165‑200(1) Omit ", 165‑190 and 165‑195", substitute "and 165‑190". 71 After section 165‑200 Insert: 165‑202 Shares held by government entities and charities etc. (1) For the purposes of a test, *shares that are beneficially owned by each of the following entities are taken to be beneficially owned instead by a person (who is not a company): (a) the Commonwealth, a State or a Territory; (b) a municipal corporation; (c) a local governing body; (d) the government of a foreign country, or of part of a foreign country; (e) a company, established under a law, in which no person has a *membership interest; (f) a *non‑profit company; (g) a charitable institution, a charitable fund or any other kind of charitable body (other than such an institution, fund or body that is a trust). (2) For the purposes of a test, *shares that are beneficially owned through a charitable institution, a charitable fund, or any other kind of charitable body, that is a trust are taken to be beneficially owned instead by a person (who is neither a company nor a trustee). 165‑203 Companies where no shares have been issued For the purposes of a test, if no *shares have been issued in a company, each *membership interest in the company is taken to be a share in the company. 72 Section 165‑207 Repeal the section, substitute: 165‑207 Trustees of family trusts (1) This section applies if one or more trustees of a *family trust: (a) owns *shares in a company; or (b) controls, or is able to control, (whether directly, or indirectly through one or more interposed entities) voting power in a company; or (c) has a right to receive (whether directly, or *indirectly through one or more interposed entities) a percentage of a *dividend or a distribution of capital of a company. (2) For the purposes of a primary test, a single notional entity that is a person (but is neither a company nor a trustee) is taken to own the *shares beneficially. Note: For a primary test, see subsections 165‑150(1), 165‑155(1) and 165‑160(1). (3) For the purposes of an alternative test, a single notional entity that is a person (but is neither a company nor a trustee) is taken: (a) to control, or have the ability to control, the voting power in the company; or (b) to have the right to receive (whether directly or *indirectly) the percentage of the *dividend or distribution for the entity's own benefit. Note: For an alternative test, see subsections 165‑150(2), 165‑155(2) and 165‑160(2). (4) If a trustee of the trust is subsequently replaced by another trustee of the trust, the same single notional entity is taken: (a) to own the *shares beneficially; or (b) to control, or have the ability to control, the voting power in the company; or (c) to have the right to receive (whether directly or *indirectly) the percentage of the *dividend or distribution for the entity's own benefit. 73 At the end of Subdivision 165‑D Add: 165‑208 Companies in liquidation etc. (1) For the purposes of a primary test or an alternative test, an entity is not prevented from: (a) beneficially owning *shares in a company; or (b) having the right to exercise, controlling, or being able to control, voting power in a company; or (c) having the right to receive any *dividends that a company may pay; or (d) having the right to receive any distribution of capital of a company; merely because: (e) the company is or becomes: (i) an externally‑administered body corporate within the meaning of the Corporations Act 2001; or (ii) an entity with a similar status under a *foreign law to an externally‑administered body corporate; or (f) either: (i) a provisional liquidator is appointed to the company under section 472 of the Corporations Act 2001; or (ii) a person with a similar status under a foreign law to a provisional liquidator is appointed to the company. Note 1: For a primary test, see subsections 165‑150(1), 165‑155(1) and 165‑160(1). Note 2: For an alternative test, see subsections 165‑150(2), 165‑155(2) and 165‑160(2). (2) For the purposes of a primary test or an alternative test, a company (the stakeholding company) is not prevented from: (a) beneficially owning *shares in another company, or any other interest in another entity; or (b) having the right to exercise, controlling, or being able to control, voting power in another company or any other entity; or (c) having the right to receive any *dividends that another company or any other entity may pay; or (d) having the right to receive any distribution of capital of another company or of any other entity; merely because: (e) the stakeholding company is or becomes: (i) an externally‑administered body corporate within the meaning of the Corporations Act 2001; or (ii) an entity with a similar status under a *foreign law to an externally‑administered body corporate; or (f) either: (i) a provisional liquidator is appointed to the stakeholding company under section 472 of the Corporations Act 2001; or (ii) a person with a similar status under a foreign law to a provisional liquidator is appointed to the stakeholding company. 165‑209 Dual listed companies Section 165‑150 does not apply to *shares that are *dual listed company voting shares. 74 Subsection 165‑210(1) Omit "The company", substitute "A company (other than a company covered by section 165‑212A)". 75 At the end of subsection 165‑210(1) Add: Note: Companies whose total income for an income year is more than $100 million cannot satisfy the same business test for the same business test period: see section 165‑212A. 76 At the end of Subdivision 165‑E Add: 165‑212A Some companies cannot satisfy the same business test For the purposes of this Division and Division 166, a company does not satisfy the *same business test for the whole or a part of the income year if the *total income of the company for the income year is more than $100 million. Note: Section 165‑212C sets out how to work out the total income of a company that is not able to work out its total income for a 12 month period. 165‑212B Definition of total income (1) The total income of a company for an income year is the total of the following: (a) any *assessable income (other than any *net capital gains) *derived during the year by the company; (b) any *exempt income derived during the year by the company; (c) any *non‑assessable non‑exempt income derived during the year by the company. (2) In working out the amount of a company's *non‑assessable non‑exempt income under paragraph (1)(c), do not include: (a) any amount covered by section 17‑5 (which is about GST); or (b) any amount of non‑assessable non‑exempt income that is not included in the company's *assessable income because an equivalent amount has already been included in the company's assessable income (whether in that year or an earlier income year). Note: For example, under section 70‑90, the actual amount received for trading stock disposed of outside the ordinary course of business is not included in a company's assessable income because the market value of that stock has already been included in the company's assessable income. 165‑212C Total income of companies who cannot work out their total income for a 12 month period (1) This section sets out how to apply sections 165‑212A and 716‑805 if: (a) the company does not exist for the whole income year; or (b) the company is a *subsidiary member of a *consolidated group or a *MEC group for a part of the income year. (2) The *total income of the company for the income year is the amount that the company reasonably estimates would be the total income if: (a) the company were in existence for the whole of the income year; and (b) the company were not a *subsidiary member of a *consolidated group or a *MEC group at any time during the year. (3) This section applies instead of section 716‑850 (which is about grossing up threshold amounts). 165‑212D Restructure of MDOs etc. (1) An *MDO does not fail to satisfy the *same business test merely because, before 1 July 2003: (a) the MDO restructured the way it *provides medical indemnity cover; or (b) the MDO ceased to provide medical indemnity cover; in order to comply with the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003. (2) A *general insurance company which is an *associate of an *MDO does not fail to satisfy the *same business test merely because, before 1 July 2003: (a) the MDO restructured the way it *provides medical indemnity cover; or (b) the MDO ceased to provide medical indemnity cover; in order to comply with the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003. 165‑212E Entry history rule does not apply for the purposes of the same business test For the purposes of the *same business test, if an entity (the joining entity) becomes a *subsidiary member of a *consolidated group or a *MEC group, section 701‑5 (the entry history rule) does not operate to take the *business of the *head company of the group to include the business of the joining entity before it became a *member of the group. 77 Paragraph 165‑235(2)(c) Omit "or net capital loss". 78 At the end of Division 165 Add: Subdivision 165‑G—Other special provisions Table of sections 165‑250 Control of companies in liquidation etc. 165‑255 Incomplete periods 165‑250 Control of companies in liquidation etc. (1) For the purposes of sections