Draft Taxation Determination
TD 2004/D21
Income tax: consolidation: capital gains: does the single entity rule in section 701-1 of the Income Tax Assessment Act 1997 mean that section 124-784 does not apply to the consolidated group in relation to shares issued by a subsidiary member to the head company under a scrip for scrip arrangement?
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Please note that the PDF version is the authorised version of this draft ruling.This document has been finalised by TD 2004/51.
FOI status:
draft only - for comment| Preamble |
| This document is a draft for industry and professional comment. As such, it represents the preliminary, though considered views of the Australian Taxation Office. This draft may not be relied on by taxpayers and practitioners as it is not a ruling for the purposes of Part IVAAA of the Taxation Administration Act 1953. It is only final Taxation Determinations that represent authoritative statements by the Australian Taxation Office. |
1. Yes. Section 124-784 of the Income Tax Assessment Act 1997 (ITAA 1997) sets a cost base for intra-group assets or debt as a result of an intra-group dealing and is inconsistent with the operation of the single entity rule in section 701-1 of the ITAA 1997.
2. Section 124-784 of the ITAA 1997 ordinarily allocates cost base to equity issued or new debt owed by an acquiring company to the ultimate head company of the group as part of an arrangement involving a downstream acquisition of another company if there is a common or significant stakeholder for the arrangement.
Date of Effect
3. When the final Determination is issued, it is proposed to apply both before and after its date of issue. However, the Determination will not apply to taxpayers to the extent that it conflicts with the terms of settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20).
Your comments
4. We invite you to comment on this draft Taxation Determination. Please forward your comments to the contact officer by the due date.
| Due date: | 30 July 2004 |
| Contact officer details have been removed following publication of the final ruling. | |
Commissioner of Taxation
30 June 2004
Not previously issued in draft form.
References
ATO references:
NO 2004/7335
Related Rulings/Determinations:
TR 92/20
Subject References:
capital gains
CGT exemptions
consolidation
consolidation - capital gains tax
head company
scrip-for-scrip rollover
single entity rule
Legislative References:
TAA 1953 Pt IVAAA
ITAA 1997 124-784
ITAA 1997 701-1