Tax Laws Amendment (2004 Measures No. 2) Act 2004 (83 of 2004)
Schedule 2 Consolidation etc.
Part 13 Privatised assets
Income Tax (Transitional Provisions) Act 1997
75 At the end of Division 701
Add:
701-50 Increased allocable cost amount for leaving entity if it takes privatised asset brought into group by chosen transitional entity
Application
(1) This section provides for an addition to the step 1 amount for working out under section 711-20 of the Income Tax Assessment Act 1997 the allocable cost amount for an entity (the leaving entity ) that ceases to be a subsidiary member of the transitional group at a time (the leaving time ), if:
(a) the head company of the group holds an asset at the leaving time because the leaving entity is taken by subsection 701-1(1) of that Act to be a part of the head company; and
(b) the head company started to hold the asset because of that subsection when a chosen transitional entity became a subsidiary member of the group.
If entity sale situation affected asset's cost for chosen transitional entity
(2) If:
(a) at a time before the chosen transitional entity became a subsidiary member of the transitional group:
(i) all of that entity's ordinary income and statutory income was not assessable income; and
(ii) that entity held the asset; and
(b) just after that time, some or all of that entity's ordinary income and statutory income became assessable income because another entity that later became a member of the transitional group purchased all the membership interests in the entity; and
(c) the amount of the purchase price reasonably attributable to the asset exceeded the amount worked out under subsection (3);
the excess is added to the step 1 amount.
(3) Work out the amount for the purposes of paragraph (2)(c) using the following table:
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Amount for paragraph (2)(c) |
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If, because of the circumstances described in paragraphs (2)(a) and (b): |
The amount is: |
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1 |
One of the following provisions applied to the entity: (a) section 61A of the Income Tax Assessment Act 1936; (b) Subdivision 57-I in Schedule 2D to the Income Tax Assessment Act 1936; (c) former subsection 58-20(4) of the Income Tax Assessment Act 1997 |
The difference between: (a) the amount treated as being the cost of the asset under that provision; and (b) the total amount treated under that provision as being the deductions for depreciation of the asset before the transition time mentioned in that provision |
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2 |
One of the following subsections of the Income Tax Assessment Act 1997 applied to the entity: (a) former subsection 58-20(5); (b) 58-70(3) |
The amount treated as being the cost, or the first element of the cost, of the asset under that subsection |
If asset sale situation affected asset's cost for chosen transitional entity
(4) If:
(a) on or after 4 August 1997, an entity (whether the chosen transitional entity or another entity) acquired the asset in connection with the acquisition of a business from the tax exempt vendor (within the meaning of those terms given by Division 58 of the Income Tax Assessment Act 1997, as that Division applied to the acquisition); and
(b) because of the acquisition, that Division directly or indirectly affected how much the chosen transitional entity could deduct for the asset; and
(c) that effect was partly due to the amount described in an item of the table being worked out for that entity directly or indirectly by reference to a provision of that Division specified in the item; and
(d) that amount is less than it would have been apart from that provision;
the difference is added to the step 1 amount.
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Amounts and provisions for different dates of acquisition |
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Date of the acquisition |
Amount |
Provision of Division 58 of the Income Tax Assessment Act 1997 applying to the acquisition and the working out of the amount |
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1 |
Before 1 July 2001 |
Cost of the asset |
Former section 58-160 |
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2 |
Before 1 July 2001 |
Cost of the asset |
Former section 58-220 |
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3 |
After 30 June 2001 |
First element of the cost of the asset |
Subsection 58-70(5) |
Note 1: As originally enacted, Division 58 of the Income Tax Assessment Act 1997 applied to acquisitions on or after 4 August 1997. That Act was later amended to replace Division 58, with the replacement Division 58 applying to acquisitions on or after 1 July 2001.
Note 2: Division 58 of the Income Tax Assessment Act 1997 may, for example, have indirectly affected how much the chosen transitional entity could deduct for the asset because:
(a) that Division affected the amount that could be deducted by an entity that held the asset before the chosen transitional entity; and
(b) that effect extended to the chosen transitional entity because of roll-over relief.