Income Tax Assessment Act 1997

Adjustment to allocable cost amount to ensure effect of Subdivision 165-CC not avoided - step 5 in working out allocable cost amount  
711-50(1)
This section applies to an asset if:

(a) the ^* head company holds the asset at the leaving time because the leaving entity is taken by subsection 701-1(1) to be a part of the head company; and

(b) assuming the head company ^* disposed of the asset at that time for its ^* market value, the head company would, in respect of the disposal:

(i) make a ^* capital loss; or

(ii) be entitled to a deduction; or

(iii) make a ^* trading stock loss;

and it would be prevented by Subdivision 165-CC from taking into account or deducting some or all (the denied amount ) of that loss or deduction; and

(c) Subdivision 165-CC would have that effect other than solely because of the operation of subsection 705-120(3) (which deems the head company to have owned a percentage of an asset at a time that triggers the operation of Subdivision 165-CC ).

711-50(2)
If this section applies, the step 5 amount for the purposes of step 5 in the table in subsection 711-20(1) is equal to the sum of the denied amounts for all assets to which subsection (1) of this section applies.

711-50(3)
Also, for the purposes of any application of Subdivision 165-CC to:

(a) a ^* capital loss made by the ^* head company; or

(b) a deduction to which the head company becomes entitled; or

(c) a ^* trading stock loss made by the head company;

after the leaving time, the head company's residual unrealised net loss under subsection 165-115BB(2) is worked out as if the head company had made a capital loss, become entitled to a deduction or made a trading stock loss at the leaving time, in respect of the assets to which subsection (1) of this section applies, of an amount equal to the sum of the denied amounts for those assets.