Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 713 - Rules for particular kinds of entities  

Subdivision 713-E - Partnerships  

Objects

SECTION 713-205   Objects of this Subdivision  

713-205(1)    
The first object of this Subdivision is to ensure that if:

(a) an entity that is a partner in a partnership becomes a ^* subsidiary member of a ^* consolidated group; and

(b) the partnership does not become a ^* subsidiary member of the group;

the provisions mentioned in subsection (3) operate as if the ^* partnership cost setting interests of the entity in the partnership were the entity ' s only assets relating to the partnership.

Note:

In general, the head company of the consolidated group is treated as a partner in the partnership, in accordance with section 701-1 (the single entity rule).

713-205(2)    
The second object of this Subdivision is to ensure that where a partnership becomes a ^* subsidiary member of a ^* consolidated group, the provisions mentioned in subsection (3) operate:

(a) as if the group became the holder of the assets of the partnership; and

(b) to set the ^* tax cost of the assets of the partnership at an appropriate amount, taking into account the taxation treatment of partnerships.

Note:

While the partnership is a subsidiary member of the group, it loses its separate tax identity (under the single entity rule in subsection 701-1(1) ). Therefore, in general, the assets of the partnership are treated as assets of the head company of the group and partnership cost setting interests in the partnership are ignored.

713-205(3)    
The provisions are:

(a) section 701-10 (about setting the tax cost of assets of an entity joining a group); and

(b) Subdivision 705-A ; and

(c) any other provision of this Act giving Subdivision 705-A a modified effect in circumstances other than those covered by that Subdivision.

Note:

An example of provisions covered by paragraph (c) are the provisions of Subdivision 705-B giving Subdivision 705-A a modified effect when a consolidated group is formed.

713-205(4)    

The third object of this Subdivision is to ensure that, where a partnership ceases to be a ^* subsidiary member of a ^* consolidated group, the provisions mentioned in subsection (5) operate:

(a) as if the group ' s ^* partnership cost setting interests were the group ' s only assets relating to the partnership; and

(b) to set the ^* tax cost of those interests at an appropriate amount, taking into account the fact that the group ceases to be the holder of the assets of the partnership.

713-205(5)    

The provisions are:

(a) sections 701-15 and 701-50 (about setting the tax cost of membership interests in an entity that leaves the group); and

(b) sections 701-20 and 701-45 (about the cost of assets consisting of certain liabilities owed by or to an entity that leaves the group); and

(c) Division 711 .