Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 705 - Tax cost setting amount for assets where entities become subsidiary members of consolidated groups  

Subdivision 705-C - Case where a consolidated group is acquired by another  

Modified application of Subdivision 705-A in relation to acquiring group

SECTION 705-185   Subdivision 705-A has effect with modifications  

705-185(1)    
Subdivision 705-A has effect in relation to the acquiring group for the head company core purposes set out in subsection 701-1(2) as if:

(a) the only ^* member of the acquired group that is a joining entity of the acquiring group were the entity that, just before the acquisition time, was the ^* head company of the acquired group; and

(b) the operation of this Part for the head company core purposes in relation to the head company and the entities that were ^* subsidiary members of the acquired group continued to have effect for the purposes of Subdivision 705-A .

Note 1:

This means that for Subdivision 705-A purposes the subsidiary members of the acquired group are treated as part of the head company of that group, and as a result their assets (other than e.g. internal membership interests) have their tax costs set at the acquisition time.

Note 2:

It also means e.g. that for Subdivision 705-A purposes the terminating values of the assets of those subsidiary members are worked out as if the assets were those of the head company at the acquisition time, and hence will be based (if applicable) on the tax cost setting amounts for assets that were set at the time entities became subsidiary members of the acquired group.

705-185(2)    
However, that effect of Subdivision 705-A is subject to modifications set out in this Subdivision.

Note:

The modifications of Subdivision 705-A made in this Subdivision constitute the second exception to Subdivision 705-A : see paragraph 705-15(b) .