Income Tax Assessment Act 1997
View history note
Hide history noteCGT 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 or a *MEC group.
104-500(2)
The time of the event is just after the entity becomes a *subsidiary member of the group.
104-500(3)
For the head company core purposes mentioned in subsection 701-1(2) , the *head company makes a capital loss equal to the reduction.
104-500(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 exceed ⅕ of the *capital loss.
104-500(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 | ||
| 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) ⅖ 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) ⅗ 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) ⅘ 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. |
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