Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 711 - Tax cost setting amount for membership interests where entities cease to be subsidiary members of consolidated groups  

Tax cost setting amount for membership interests etc.  

SECTION 711-75   Additional integrity rule if membership interests treated as having been acquired before 20 September 1985 under section 711-65 - application of CGT event K6  

711-75(1)    
This section applies if the leaving entity ceases to be a *subsidiary member of the old group because of a situation giving rise to *CGT event A1, C2, E1, E2 or E8 in relation to one or more *membership interests in the leaving entity.

711-75(2)    
For the purposes of applying subsections 104-230(2) and (8) in relation to those *membership interests:

(a) disregard subsection 701-1(1) (the single entity rule) in working out the *net value of the leaving entity; and

(b) treat the reference in subsection 104-230(2) to " Just before the other event happened " as a reference to " Just before the leaving time " .

Note 1:

The single entity rule will continue to apply in determining whether the property mentioned in subsection 104-230(2) for the leaving entity was acquired on or after 20 September 1985.

Note 2:

However, in a case of multiple exit from a consolidated group (see section 711-55 ), the property mentioned in subsection 104-230(2) for the leaving entity may include membership interests in another entity leaving the group at the leaving time. To determine which of those membership interests were acquired on or after 20 September 1985 for the purposes of applying subsection 104-230(2) to the leaving entity, see section 711-65 .

711-75(3)    
In determining the sum of the *cost bases of the property mentioned in subsection 104-230(6) , treat the cost base of an asset that is included in that property as:

(a) if the asset has its *tax cost set at the leaving time under section 701-50 - its *tax cost setting amount; or

(b) if the *terminating value of the asset is taken into account in working out the step 1 amount under section 711-25 for the leaving entity - that terminating value; or

(c) if the asset is taken into account in working out the step 3 amount under section 711-40 for the leaving entity - the value of the asset that is so taken into account.