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 trust

SECTION 715-270   Subdivision 165-CD applies  

715-270(1)    
At and after the time (the leaving time ) when a trust ceases to be a ^* subsidiary member of a ^* consolidated group, Subdivision 165-CD (about reductions after alterations in ownership or control of loss company) applies to the trust on the basis set out in this section.

715-270(2)    
The trust is taken to be a company.

715-270(3)    
The leaving time is the only alteration time in respect of the trust.

715-270(4)    
The trust is a loss company at that time if, and only if, it has an ^* adjusted unrealised loss at that time. If so, that adjusted unrealised loss is its overall loss at that time.

715-270(5)    

If the trust is a ^* loss company at the leaving time and 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 (6) or (7) of this section has effect for the purposes of applying, to each ^* membership interest in the trust, in relation to the time just before the leaving time, whichever of these provisions is appropriate:

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

(b) 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;

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

Note:

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

715-270(5A)    

For the purposes of subsection (5), 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) .

715-270(6)    
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.

715-270(7)    
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:

(i) 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

(ii) each of those interests was an equity 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).

715-270(8)    
The ^* head company ' s choice must be made within 6 months after the leaving time, or within a further period allowed by the Commissioner.

715-270(9)    
After that 6 months, or that further period, the head company is taken to have chosen subsection (6) unless it is established that the head company made a different choice within that 6 months or further period.

Non-membership equity interests

715-270(10)    

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 is the old group referred to in that subsection.