Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 713 - Rules for particular kinds of entities  

Subdivision 713-E - Partnerships  

Special rules where partnership leaves consolidated group

SECTION 713-255   Partnership leaves group - tax cost setting amount for partnership cost setting interests  

Overview

713-255(1)    
Instead of working out ^* tax cost setting amounts for ^* membership interests in the partnership, a special rule requires ^* partnership cost setting interests in the partnership to be worked out. Where other entities cease to be ^* subsidiary members at the same time, the normal tax cost setting amount rules are applied for membership interests in the other entities, but the special rule is applied for partnership cost setting interests in the partnership.

Tax cost setting amounts for membership interests in partnership not to be worked out

713-255(2)    
Do not work out ^* tax cost setting amounts for ^* membership interests in the partnership.

Partnership is only entity that exits - tax cost setting amount for partnership cost setting interests

713-255(3)    
Except where the partnership ceases to be a ^* subsidiary member in circumstances covered by subsection (5), work out in accordance with subsection (4) the ^* tax cost setting amount just before the leaving time for each ^* partnership cost setting interest in the partnership held by a partner that is a ^* member of the group just before the leaving time.

Tax cost setting amount

713-255(4)    
The ^* tax cost setting amount is equal to the partner's individual share of the ^* terminating value of the partnership asset to which the ^* partnership cost setting interest relates.

Note:

For income tax purposes there is no disposal by the head company of any assets of the partnership when it ceases to be a subsidiary member of the group.

Multiple exit case - tax cost setting amounts for both partnership cost setting interests in partnership and membership interests in other entities

713-255(5)    
If the partnership is one of 2 or more entities that cease to be ^* subsidiary members of the old group at the same time because of an event happening in relation to one of them, apply section 711-55 as if:

(a) except in paragraph 711-55(3)(a) , a reference to ^* membership interests in an entity, or to the ^* tax cost setting amount for such interests, where the entity is the partnership, were a reference to ^* partnership cost setting interests in the partnership, or to the tax cost setting amount for such interests; and

(b) paragraph 711-55(3)(a) were replaced by a requirement that, where the entity in which the membership interests mentioned in subsection 711-55(3) are held is the partnership, subsection (4) of this section is to be applied in working out the tax cost setting amount of the partnership cost setting interests in the partnership.