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  

Setting tax cost of partnership cost setting interests

SECTION 713-225   Tax cost setting amount for partnership cost setting interest  

713-225(1)    
This section modifies the way in which the ^* tax cost setting amounts are worked out under Division 705 for the ^* partnership cost setting interests mentioned in paragraph 713-220(2)(a) .

Partnership cost setting interest takes character of partnership asset - general

713-225(2)    
Work out the ^* tax cost setting amounts for those ^* partnership cost setting interests as if any partnership cost setting interest that relates to an asset (the underlying partnership asset ) of the partnership were an asset of the same kind as the underlying partnership asset.

Note:

The kinds of assets mentioned in subsection (2) include the following:

(a) retained cost base assets;

(b) reset cost base assets that are held on revenue account (however, if such assets are trading stock or depreciating assets, the special rule in subsection (4) will apply) or on capital account;

(c) excluded assets (see subsection (3));

(d) current assets (within the meaning of subsection 705-125(2) ).

Example:

The partnership has an asset that is Australian currency (which is a retained cost base asset). A partnership cost setting interest of the joining entity in that asset is treated as a retained cost base asset for the purpose of working out the tax cost setting amounts for the joining entity ' s partnership cost setting interests in the partnership.

Partnership cost setting interest takes character of partnership asset - excluded assets

713-225(3)    
If:

(a) tax cost setting amounts were to be worked out for the assets of the partnership under Division 705 ; and

(b) in working out those amounts, the underlying partnership asset mentioned in subsection (2) would be an excluded asset for the purposes of section 705-35 ;

then subsection (2) operates so that the ^* tax cost setting amounts for those ^* partnership cost setting interests are worked out as if any partnership cost setting interest that relates to the underlying partnership asset were an excluded asset for the purposes of section 705-35 .

Special character of partnership cost setting interest in partnership asset that is trading stock, a depreciating asset or a registered emissions unit

713-225(4)    

Despite subsection (2), if an asset of the partnership is ^* trading stock, a *depreciating asset or a *registered emissions unit, work out the ^* tax cost setting amounts for those ^* partnership cost setting interests as if:

(a) a partnership cost setting interest relating to that asset were a ^* retained cost base asset; and

(b) the tax cost setting amount for that partnership cost setting interest were equal to its ^* terminating value (worked out in accordance with section 713-215 ).

Reduction in allocable cost amount for over-depreciated partnership assets

713-225(5)    
(Repealed by No 56 of 2010)

Partnership liabilities - working out allocable cost amount

713-225(6)    
If:

(a) in accordance with the *accounting principles that the partnership would use if it were to prepare its financial statements just before the joining time, a thing (the partnership liability ) is a liability of the partnership at the joining time; and

(b) for that reason, the partnership liability is not an accounting liability of the joining entity at the joining time for the purposes of section 705-70 ;

then sections 705-70 , 705-75 and 705-80 operate as if the partnership liability were an accounting liability of the joining entity at the joining time, to the extent of the joining entity ' s individual share of the partnership liability.

713-225(6A)    
(Repealed by No 143 of 2007 )

Partnership deductions - working out allocable cost amount

713-225(7)    
Section 705-115 operates as if:

(a) a deduction to which the partnership is entitled (the partnership deduction ) were a deduction to which the joining entity was entitled, to the extent of the joining entity ' s individual share of the partnership deduction; and

(b) the deduction to which the joining entity was entitled were of the same kind as the partnership deduction.

Note:

These kinds of deductions include acquired deductions and owned deductions (within the meaning of section 705-115 ).