Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 715 - Interactions between this Part and other areas of the income tax law  

Subdivision 715-B - How Subdivision 165-CD applies to consolidated groups and leaving entities  

How Subdivision 165-CD applies to consolidated groups

SECTION 715-225   Working out adjusted unrealised loss using individual asset method  

715-225(1)    
For the purposes of:

(a) using the ^* individual asset method to work out whether the ^* head company of a ^* consolidated group has an adjusted unrealised loss under section 165-115U at an ^* alteration time; or

(b) working out under section 165-115W whether the head company of a consolidated group has a trading stock decrease at an alteration time;

step 1 of the method statement in subsection 165-115U(1) , or step 2 of the method statement in subsection 165-115W(1) , does not apply to an amount that was counted in respect of a ^* CGT asset at an earlier time if:

(c) at the time (the joining time ) when an entity became a ^* subsidiary member of the group, the asset became an asset of the head company because of subsection 701-1(1) (Single entity rule); and

(d) the earlier time is an ^* alteration time that happened in respect of the entity before the joining time;

unless the entity is a chosen transitional entity under Division 701 of the Income Tax (Transitional Provisions) Act 1997 .

Note:

If the joining entity is a chosen transitional entity, section 701-15 of the Income Tax (Transitional Provisions) Act 1997 prevents:

• section 701-10 (cost to head company of assets of joining entity); and

• subsection 701-35(4) (setting value of trading stock at tax-neutral amount);

of this Act from applying to the assets of the joining entity in relation to the joining time.

If the joining entity is not a chosen transitional entity, it is assumed that the process of resetting the tax costs of its assets will bring their tax costs into closer alignment to their market values, and so remove the need to consider unrealised losses on those assets that existed before the joining time.

715-225(2)    
This section has effect despite section 701-5 (Entry history rule).