Income Tax Assessment Act 1997
CHAPTER 3
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SPECIALIST LIABILITY RULES
PART 3-90
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CONSOLIDATED GROUPS
Division 711
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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 711-20
What is the old group
'
s
allocable cost amount
for the leaving entity?
711-20(1)
Work out the old group ' s allocable cost amount for the leaving entity in this way:
Recalculation in order to work out amount of capital loss
711-20(2)
If it is necessary to work out whether the * head company makes a capital loss for a * CGT event that happens at or after the leaving time in relation to any of the * membership interests, the old group ' s allocable cost amount for the leaving entity is instead worked out as if the head company ' s * terminating value for any asset covered by subsection 705-30(4) (as it applies for the purposes of section 711-30 ) were instead equal to the asset ' s * reduced cost base just before the leaving time.
View history note
Hide history noteWork out the old group ' s allocable cost amount for the leaving entity in this way:
| Working out the old group ' s allocable cost amount for the leaving entity | ||
| Step | What the step requires | Purpose of the step |
| 1 | Start with the step 1 amount worked out under section 711-25, which is about the *terminating values of the leaving entity ' s assets just before the leaving time. | To ensure that the allocable cost amount includes the cost of the assets. |
| 2 | Add to the result of step 1 the step 2 amount worked out under section 711-35, which is about the value of deductions inherited by the leaving entity that are not reflected in the *terminating value of the leaving entity ' s assets just before the leaving time. | To ensure that the value of the deductions is reflected in the allocable cost amount. |
| 3 | Add to the result of step 2 the step 3 amount worked out under section 711-40, which is about liabilities owed by *members of the old group to the leaving entity at the leaving time. | To ensure that the liabilities, which are not recognised while the leaving entity is taken to be part of the *head company by subsection 701-1(1), are reflected in the allocable cost amount. |
| 4 | Subtract from the result of step 3 the step 4 amount worked out under section 711-45, which is about:
(a) the leaving entity ' s liabilities just before the leaving time; and (b) *membership interests in the leaving entity that are not held by *members of the old group. |
To ensure that the allocable cost amount is reduced to reflect the liabilities and the value of the membership interests. |
| 5 | If the amount remaining after step 4 is positive, it is the old group ' s allocable cost amount for the leaving entity. Otherwise the old group ' s allocable cost amount is nil. | |
| 6 | (Repealed by No 90 of 2002) |
Note:
If the amount remaining after step 4 is negative, the head company is taken to have made a capital gain equal to the amount: see CGT event L5.
Recalculation in order to work out amount of capital loss
711-20(2)
If it is necessary to work out whether the * head company makes a capital loss for a * CGT event that happens at or after the leaving time in relation to any of the * membership interests, the old group ' s allocable cost amount for the leaving entity is instead worked out as if the head company ' s * terminating value for any asset covered by subsection 705-30(4) (as it applies for the purposes of section 711-30 ) were instead equal to the asset ' s * reduced cost base just before the leaving time.
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