Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 716 - Miscellaneous special rules  

Subdivision 716-E - Tax cost setting for exploration and prospecting assets  

SECTION 716-300   Prime cost method of working out decline in value  

716-300(1)    
This section has effect if:

(a) an entity (the joining entity ) becomes a ^* subsidiary member of a ^* consolidated group at a time (the joining time ); and

(b) because of subsection 40-80(1) , the joining entity could (or did) deduct for a period before the joining time the ^* cost of a ^* depreciating asset that became an asset of the ^* head company of the group at the joining time because section 701-1 (Single entity rule) applied to the joining entity; and

(c) the joining entity could not deduct an amount under Subdivision 40-B (except because of subsection 40-80(1) ) for the income year that includes the joining time for that cost.

Note:

Subdivision 40-B allows deductions for the decline in value of depreciating assets. Subsection 40-80(1) , which is in that Subdivision, provides that the decline in value of certain assets used for exploration and prospecting equals their cost.

716-300(2)    
Subsection 701-55(2) has effect as if the ^* prime cost method for working out the decline in value of the ^* depreciating asset applied just before the joining time.

Note:

This may affect both the method of working out the decline in value of the asset and the asset ' s effective life.