Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 719 - MEC groups  

Subdivision 719-C - MEC group cost setting rules: joining cases  

Modified application of tax cost setting rules for joining

SECTION 719-170   Modified effect of subsections 705-175(1) and 705-185(1)  

719-170(1)    
This section applies if all of the ^* members of a ^* MEC group (the acquired group ) become members of another MEC group, or of a ^* consolidated group, at a particular time (the acquisition time ) as a result of the ^* acquisition of ^* membership interests in:

(a) the ^* head company of the acquired group; and

(b) other entities that were ^* eligible tier-1 companies of the acquired group just before the acquisition time.

719-170(2)    
Subsections 705-175(1) and 705-185(1) have effect as if a ^* membership interest in an entity mentioned in paragraph (1)(b) of this section were a membership interest in the ^* head company of the acquired group.

Note 1:

If the acquiring group is a MEC group, and the head company of the acquired group becomes an eligible tier-1 company of the acquiring group, the assets of the members of the acquired group do not have their tax cost reset at the acquisition time. This is because:

(a) section 719-160 treats an entity becoming an eligible tier-1 company of the acquiring group as if it were a part of the head company of that group; and

(b) section 705-185 treats the subsidiary members of the acquired group as part of the head company of the acquired group.

Note 2:

If:

(a) the acquiring group is a MEC group, but the head company of the acquired group does not become an eligible tier-1 company of the acquiring group; or

(b) the acquiring group is a consolidated group and the acquired group is a MEC group;

the assets of the members of the acquired group have their tax cost reset at the acquisition time (section 719-160 does not preclude tax cost resetting in these cases). For the purposes of resetting the tax cost of those assets, section 705-185 treats the subsidiary members of the acquired group as part of the head company of the acquired group.