New Business Tax System (Consolidation and Other Measures) Act (No. 1) 2002 (117 of 2002)
Schedule 3 Consolidation: effect on cost base rules etc. of loss of pre-CGT status of membership interests
Part 2 Consequential CGT amendments
Income Tax Assessment Act 1997
6 At the end of Division 104
Add:
Subdivision 104-L - Consolidated groups
Table of sections
104-500 Loss of pre-CGT status of membership interests in entity becoming subsidiary member: CGT event L1
104-500 Loss of pre-CGT status of membership interests in entity becoming subsidiary member: CGT event L1
(1) CGT event L1 happens if, under section 705-57 (including in its application in accordance with Subdivisions 705-B to 705-E), there is a reduction in the*tax cost setting amount of assets of an entity that becomes a*subsidiary member of a*consolidated group.
(2) The time of the event is just after the entity becomes a*subsidiary member of the group.
(3) For the head company core purposes mentioned in subsection 701-1(2), the*head company makes a capital loss equal to the reduction.
(4) The amount of the capital loss that can be applied to reduce the head company's*capital gains for the first income year ending after the entity becomes a*subsidiary member of the group (the first income year ) cannot exceed1/5of the*capital loss.
(5) The amount of the*net capital loss from the first income year, to the extent the amount is attributable to the*capital loss (the extent being the event L1 attributable loss ), that can be applied to reduce the head company's*capital gains for a later income year cannot exceed the amount worked out for the year using the following table:
|
Limit on applying event L1 attributable loss |
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|---|---|---|
|
Item |
For this income year: |
The amount of the event L1 attributable loss that can be applied cannot exceed: |
|
1 |
For the second income year ending after the entity became a*subsidiary member |
The difference between: (a)2/5 of the*capital loss; and (b) the amount of the capital loss that was applied in accordance with subsection (4) for the first income year. |
|
2 |
For the third income year ending after the entity became a*subsidiary member |
The difference between: (a)3/5 of the*capital loss; and (b) the sum of the amount mentioned in paragraph (b) of item 1 and the amount of the event L1 attributable loss that was applied to reduce the entity's*capital gains for the next income year after the first income year. |
|
3 |
For the fourth income year ending after the entity became a*subsidiary member |
The difference between: (a)4/5 of the*capital loss; and (b) the sum of the amount mentioned in paragraph (b) of item 1 and the amounts of the event L1 attributable loss that were applied to reduce the entity's*capital gains for earlier income years ending after the first income year. |
|
4 |
For the fifth income year ending after the entity became a*subsidiary member, or for any later income year |
The difference between: (a) the*capital loss; and (b) the sum of the amount mentioned in paragraph (b) of item 1 and the amounts of the event L1 attributable loss that were applied to reduce the entity's*capital gains for earlier income years ending after the first income year. |