Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 701 - Core rules  

Head company rules  

SECTION 701-20   Cost to head company of assets consisting of certain liabilities owed by entity that leaves group  

701-20(1)    
If the entity ceases to be a ^* subsidiary member of the group, this section has effect for the head company core purposes, so far as they relate to the income year in which the entity ceases to be a subsidiary member or any later income year.

Assets to which section applies

701-20(2)    
This section applies in relation to each asset, consisting of a liability owed by the entity, that becomes an asset of the ^* head company because subsection 701-1(1) (the single entity rule) ceases to apply to the entity when it ceases to be a ^* subsidiary member. This is a liability that, ignoring that subsection, is owed to a ^* member of the group.

Object

701-20(3)    
The object of this section is to set a cost for the asset to enable income tax consequences for the ^* head company in respect of the asset to be determined.

Setting tax cost of assets

701-20(4)    
The asset's ^* tax cost is set at the time the entity ceases to be a ^* subsidiary member of the group at the asset's ^* tax cost setting amount.

Note:

If the entity is a partnership, Subdivision 713-E sets the tax cost of assets consisting of a partner's share of a liability owed by the partnership to a member of the group.