Income Tax (Transitional Provisions) Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 701B - Modified application of provisions of Income Tax Assessment Act 1997 relating to CGT event L1  

SECTION 701B-1   Modified application of CGT Consolidation provisions to allow immediate availability of capital loss for CGT event L1  

701B-1(1)    
This section applies if:

(a) CGT event L1 happens; and

(b) members of the consolidated group or the MEC group mentioned in subsection 104-500(1) of the Income Tax Assessment Act 1997 held all of the membership interests in the entity mentioned in that subsection from the end of 30 June 2002 until the entity became a subsidiary member of the group; and

(c) before the end of the fourth income year of the head company of the group ending after the entity became a subsidiary member of the group, the entity ceases to be a subsidiary member; and

(d) all of the assets, other than those excepted under subsection (2), that the head company held when the entity became a subsidiary member, because the entity was taken by subsection 701-1(1) (the single entity principle) of the Income Tax Assessment Act 1997 to be a part of the head company, continued to be held by the head company until the entity ceased to be a subsidiary member.

Excepted assets

701B-1(2)    
For the purposes of paragraph (1)(d), excepted assets are assets that:

(a) the head company disposed of in the ordinary course of a business that the head company carried on by virtue of the entity being taken by subsection 701-1(1) of the Income Tax Assessment Act 1997 to be a part of the head company; and

(b) were minor assets, having regard to the nature and size of that business.

Immediate availability of capital loss or net capital loss

701B-1(3)    
If this section applies, neither subsection 104-500(4) nor subsection 104-500(5) of the Income Tax Assessment Act 1997 applies in relation to the head company for the income year in which the entity ceases to be a subsidiary member of any later income year.