Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 716 - Miscellaneous special rules  

Subdivision 716-A - Assessable income and deductions spread over several membership or non-membership periods  

Operative provisions

SECTION 716-70   Capital expenditure that is fully deductible in one income year  

716-70(1)    
This section applies if, apart from this Part, an entity could deduct for a single income year the whole of an amount (the original amount ) of capital expenditure by the entity.

716-70(2)    
If for some but not all of an income year an entity is a * subsidiary member of a * consolidated group or * MEC group, and:


(a) the * head company of the group could have deducted the original amount for that income year if the entity had been a subsidiary member of the group throughout that income year; but


(b) the entity could have deducted the original amount for that income year if throughout that income year the entity had not been a subsidiary member of any consolidated group or MEC group;

the head company can deduct for that income year a proportion of the original amount.

Note 1:

Examples of when paragraphs (2)(a) and (b) could be satisfied are set out in note 1 to subsection 716-15(2) .

Note 2:

If the entity is a subsidiary member of the group throughout the income year, the head company can deduct the original amount for the income year, either:

  • • because the head company is the entity referred to in subsection (1) of this section; or
  • • because of section 701-1 (Single entity rule); or
  • • because of section 701-5 (Entry history rule).

  • 716-70(3)    
    The proportion is worked out by multiplying the original amount by:

  • • the number of days that are in the * spreading period, and on which the entity was a * subsidiary member of the group;
  • divided by:

  • • the number of days that are in the spreading period.


  • Entity ' s deduction for a non-membership period

    716-70(4)    
    If:


    (a) for some but not all of an income year, an entity is a * subsidiary member of a * consolidated group or * MEC group; and


    (b) the entity could have deducted the original amount for that income year if throughout that income year the entity had not been a subsidiary member of any consolidated group or MEC group;

    the entity can deduct a proportion of the original amount for a part of the income year that is a non-membership period for the purposes of section 701-30 .

    Note 1:

    Section 701-30 is about working out an entity ' s tax position for a period when it is not a subsidiary member of any consolidated group.

    Note 2:

    If throughout the income year the entity is not a subsidiary member of any consolidated group or MEC group, this section does not affect the entity ' s ability to deduct the original amount for the income year either:

  • • because the entity is the entity referred to in subsection (1); or
  • • because of section 701-40 (Exit history rule).

  • 716-70(5)    
    The proportion is worked out by multiplying the original amount by:

  • • the number of days that are in both the non-membership period and the * spreading period;
  • divided by:

  • • the number of days that are in the spreading period.


  • Spreading period

    716-70(6)    
    The spreading period for the original amount:


    (a) starts when, apart from this Part, an entity would become entitled to deduct the amount for an income year; and


    (b) ends at the end of the income year.


     

    Disclaimer and notice of copyright applicable to materials provided by CCH Australia Limited

    CCH Australia Limited ("CCH") believes that all information which it has provided in this site is accurate and reliable, but gives no warranty of accuracy or reliability of such information to the reader or any third party. The information provided by CCH is not legal or professional advice. To the extent permitted by law, no responsibility for damages or loss arising in any way out of or in connection with or incidental to any errors or omissions in any information provided is accepted by CCH or by persons involved in the preparation and provision of the information, whether arising from negligence or otherwise, from the use of or results obtained from information supplied by CCH.

    The information provided by CCH includes history notes and other value-added features which are subject to CCH copyright. No CCH material may be copied, reproduced, republished, uploaded, posted, transmitted, or distributed in any way, except that you may download one copy for your personal use only, provided you keep intact all copyright and other proprietary notices. In particular, the reproduction of any part of the information for sale or incorporation in any product intended for sale is prohibited without CCH's prior consent.