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.