New Business Tax System (Consolidation, Value Shifting, Demergers and Other Measures) Act 2002 (90 of 2002)

Schedule 14   Loss integrity rules: global method of valuing assets

Part 1   Income Tax Assessment Act 1997

4   At the end of section 165-115E

Add:

(2) The global method of working out whether the company has an unrealised net loss at the relevant time is as follows:

Method statement

Step 1. Work out the total market value of all*CGT assets that the company owned at the relevant time (including those it*acquired for less than $10,000), using a valuation method that would generally be regarded as appropriate in the circumstances.

Step 2. Work out the total of the*cost bases of those*CGT assets at the relevant time.

Note: If a CGT asset that the company owned at the relevant time was also trading stock or a revenue asset at that time, see subsection (3) of this section.

Step 3. If the step 2 amount exceeds the step 1 amount, the excess is the company's preliminary unrealised net loss at the relevant time.

Step 4. Add up the company's preliminary unrealised net loss and any*capital loss, deduction or share of a deduction disregarded under section 170-270 in relation to an asset referred to in paragraph 165-115A(1A)(b). The total is the company's unrealised net loss at the relevant time.

(3) If:

(a) a*CGT asset that the company owned at the relevant time was also*trading stock or a*revenue asset at that time; and

(b) the asset's*cost base at the relevant time isless than the amount that would be compared under section 165-115F with the asset's market value in working out a notional revenue gain or notional revenue loss that the company has at the relevant time in respect of the asset;

then, for the purposes of step 2 of the method statement in subsection (2) of this section, the amount that would be so compared is to be taken into accountinstead of that cost base.

(4) A choice to use the*global method must be made on or before:

(a) the day on which the company lodges its income tax return for the income year in which the relevant time occurred; or

(b) such later day as the Commissioner allows.