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-A - Basic case: a single entity joining an existing consolidated group  

Tax cost setting amount for assets that joining entity brings into joined group

SECTION 705-45   Reduction in tax cost setting amount for accelerated depreciation assets  

705-45(1)    
If:

(a) an asset of the joining entity is a ^* depreciating asset to which Division 40 applies; and

(aa) just before the entity became a subsidiary member, subsection 40-10(3) or 40-12(3) of the Income Tax (Transitional Provisions) Act 1997 applied for the purposes of the joining entity working out the asset's decline in value under Division 40 ; and

Note:

The effect of those subsections was to preserve an entitlement to accelerated depreciation.

(b) the asset's ^* tax cost setting amount would be greater than the joining entity's ^* terminating value for the asset; and

(c) the ^* head company chooses to apply this section to the asset;

the asset's tax cost setting amount is reduced so that it equals the terminating value.

Note 1:

A consequence of the choice is that accelerated depreciation will apply to the asset: see section 701-80 .

Note 2:

Unlike the position with a reduction in tax cost setting amount under section 705-40 , the amount of the reduction is not re-allocated among other assets.

705-45(2)    

If:

(a) an asset of the joining entity is a *depreciating asset to which Division 40 applies; and

(b) any of the following has applied before the joining entity became a *subsidiary member for the purposes of working out the asset ' s decline in value under Division 40 :

(i) section 40-82 ;

(ii) Subdivision 40-BA of the Income Tax (Transitional Provisions) Act 1997 ;

(iii) Subdivision 40-BB of that Act; and

(c) the asset ' s *tax cost setting amount would be greater than the joining entity ' s *terminating value for the asset;

the asset ' s tax cost setting amount is reduced so that it equals the terminating value.

Note 1:

The provisions referred to in paragraph (b) provide for an accelerated decline in value of certain assets.

Note 2:

Unlike the position with a reduction in tax cost setting amount under section 705-40 , the amount of the reduction is not re-allocated among other assets.