Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 711 - Tax cost setting amount for membership interests where entities cease to be subsidiary members of consolidated groups  

Tax cost setting amount for membership interests etc.  

SECTION 711-25   Terminating values of the leaving entity's assets - step 1 in working out allocable cost amount  

711-25(1)    
For the purposes of step 1 in the table in subsection 711-20(1) , the step 1 amount is worked out by adding up the ^* head company ' s ^* terminating values of all the assets that the head company holds at the leaving time because the leaving entity is taken by subsection 701-1(1) (the single entity rule) to be a part of the head company.

Goodwill

711-25(2)    
If loss of control and ownership of the leaving entity by the ^* head company would decrease the ^* market value of the goodwill associated with assets or businesses of the old group (other than those of the leaving entity), the head company ' s ^* cost base of the asset consisting of goodwill that it holds at the leaving time because of its control and ownership of the leaving entity is added to the step 1 amount.

Note:

If the asset arose because the head company acquired control and ownership of a joining entity, subsection 705-35(3) would have applied in relation to the joining entity. The asset could also have arisen e.g. because the head company acquired a business from an entity without acquiring the entity.

Increase in step 1 amount for certain former privatised assets

711-25(3)    

If:

(a) the ^* head company of the old group ^* holds a ^* depreciating asset at the leaving time because the leaving entity is taken by subsection 701-1(1) (the single entity rule) to be a part of the head company; and

(b) the asset ' s ^* tax cost was set at the ^* tax cost setting amount when an entity (whether the leaving entity or another entity) became a ^* subsidiary member of the old group; and

(c) the tax cost setting amount for the asset was reduced because of section 705-47 (which is about certain assets that were ^* privatised assets);

the amount of the reduction is added to the step 1 amount.

Increase in step 1 amount for certain privatised assets

711-25(4)    

If:

(a) the ^* head company of the old group ^* holds a ^* depreciating asset at the leaving time because the leaving entity is taken by subsection 701-1(1) (the single entity rule) to be a part of the head company; and

(b) the first element of the ^* cost of the asset was worked out by reference to subsection 58-70(5) because a ^* member of the old group acquired the asset as described in subsection 58-5(4) on or after 1 July 2002; and

(c) the amount of the first element of the cost of the asset is less than the amount it would have been apart from item 11 of the table in subsection 40-180(2) (which makes subsection 58-70(5) relevant to working out that element);

the difference between the amounts is added to the step 1 amount.