Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 715 - Interactions between this Part and other areas of the income tax law  

Subdivision 715-B - How Subdivision 165-CD applies to consolidated groups and leaving entities  

How Subdivision 165-CD applies to leaving entity that is a company

SECTION 715-255   Consequences if leaving entity is a loss company at the leaving time  

715-255(1)    
If:

(a) section 715-245 or 715-250 applies; and

(b) the leaving entity is a ^* loss company at the leaving time; and

(ba) the *head company has a relevant equity interest under section 165-115X in the leaving entity at the leaving time;

the head company must choose whether subsection (2) or (3) of this section has effect for the purposes of applying, to each ^* membership interest in the leaving entity, in relation to the time just before the leaving time, whichever of these provisions is appropriate:

(c) subsection 701-55(3) (about trading stock);

(d) subsection 701-55(5) , but only so far as it relates to working out the ^* reduced cost base of a ^* membership interest that was ^* acquired on or after 20 September 1985;

(e) subsection 701-55(6) (about revenue assets).

Note:

Section 701-55 is about setting the tax cost of an asset.

715-255(1A)    

For the purposes of paragraph (1)(ba), in determining whether the *head company has the relevant equity interest, disregard the operation of subsection 701-1(1) (the single entity rule) in applying subsections 165-115X(2C) and 165-115X(4) .

715-255(2)    
If the ^* head company chooses this subsection, the interest ' s ^* tax cost setting amount (apart from this section) just before the leaving time is reduced to nil.

715-255(3)    
If the ^* head company chooses this subsection, the interest ' s ^* tax cost setting amount (apart from this section) just before the leaving time is reduced by the adjustment amount under section 165-115ZB , which is calculated on the basis that:

(a) just before the leaving time, all the ^* membership interests in the leaving entity constituted a single relevant equity interest under section 165-115X that the head company had in the leaving entity; and

(b) the adjustment amount is worked out and applied in accordance with subsection 165-115ZB(6) , but disregarding the paragraphs of that subsection except paragraphs 165-115ZB(6)(a) and (d).

715-255(4)    
The ^* head company ' s choice must be made within 6 months after the leaving time, or within a further period allowed by the Commissioner.

715-255(5)    
After that 6 months, or that further period, the head company is taken to have chosen subsection (2) unless it is established that the head company made a different choice within that 6 months or further period.

Non-membership equity interests

715-255(6)    

Subsection 711-15(2) (which treats *non-membership equity interests as *membership interests) also applies for the purposes of this section, on the basis that the *consolidated group referred to in section 715-240 is the old group referred to in that subsection.