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

View history reference

View history note

Tax cost setting amount for membership interests etc.

SECTION 711-40

711-40 Liabilities owed to the leaving entity by members of the old group - step 3 in working out allocable cost amount

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For the purposes of step 3 in the table in subsection 711-20(1) , the step 3 amount is the total, for all liabilities owed by *members of the old group to the leaving entity at the leaving time, of the *tax cost setting amounts of the corresponding assets of the leaving entity.

Note:

The tax cost of a corresponding asset of the leaving entity is set under section 701-45 . The tax cost setting amount of the corresponding asset is determined under section 701-60A .

View history note

History

S 711-40 substituted by No 14 of 2018, s 3 and Sch 1 item 28, effective 1 April 2018. For application provision, see note under s 701-60A . See also note under s 716-440 . S 711-40 formerly read:

SECTION 711-40 Liabilities owed to the leaving entity by members of the old group - step 3 in working out allocable cost amount
711-40(1)
For the purposes of step 3 in the table in subsection 711-20(1), the step 3 amount is the total, for all liabilities owed by *members of the old group to the leaving entity at the leaving time, of the *market values of the corresponding assets of the leaving entity.

Where cost of liability is less than its market value

711-40(2)
However, if subsection (3) applies to any of the liabilities, the cost amount mentioned in that subsection, instead of the *market value, is to be used under subsection (1) for the liability in working out the step 3 amount.

711-40(3)
This subsection applies to a liability if:

(a) the *member of the old group would have made a *capital gain or a *capital loss for the *CGT event that, disregarding subsection 701-1(1) (the single entity principle), would have happened when the liability arose; and

(b) the amount (the cost amount ) of:

(i) if the CGT event is or would have been CGT event D1 - the *incidental costs; or

(ii) if the CGT event is CGT event D2, D3 or F1 - the expenditure incurred; or

(iii) in any other case - the *cost base or *reduced cost base;
that would be taken into account is less than the *market value of the liability.

S 711-40 inserted by No 68 of 2002, s 3 and Sch 1 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec 700-1 of the Income Tax (Transitional Provisions) Act 1997 ).

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