Income Tax Assessment Act 1997
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In the case of a foreign hybrid company, references in this Subdivision that relate to partnerships are to be read subject to Subdivision 830-B . For example, a reference to a partner will be a reference to a shareholder in the company who is treated by Subdivision 830-B as a partner.
A partner ' s tax cost setting amount for an interest of the partner in an asset at the start of the hybrid year, in relation to an *asset-based income tax regime, is worked out as follows: Method statement
Step 1.
Work out what would have been the entity ' s *tax cost of the asset for the purposes of applying the *asset-based income tax regime as at the start of the hybrid year if it were not a *foreign hybrid in relation to the hybrid year.
Step 2.
Multiply the result of step 1 by:
Step 3.
If the partner paid a premium in respect of the *acquisition of its interest in the asset (see subsection (2)), add the amount of the premium to the result of step 2. If the partner received a discount in respect of the acquisition (see subsection (2)), subtract the amount of the discount from the result of step 2, but not to the extent that this would result in a negative amount.
The result of step 3 is the partner ' s tax cost setting amount in respect of the asset.
830-95(2)
Work out whether the partner paid a premium or received a discount for its interest in the asset using the following method statement: Method statement
Step 1.
Add up all the amounts paid by the partner before the start of the hybrid year for its *shares in the entity (if the entity was a company), or for its interests in the assets of the entity and in the entity (if the entity was a *limited partnership), that it held at the start of the hybrid year, and subtract all amounts received by the partner in respect of those shares or interests by way of reduction in capital of the entity.
Step 2.
Work out the amount that, if the capital of the entity had been distributed to its *shareholders on a winding-up or to its partners on a dissolution, at the end of the income year before the hybrid year, the partner could reasonably be expected to have received of the total distribution.
Step 3.
If the result of step 1 exceeds the result of step 2, the partner paid a premium for its interest in the asset. If the result of step 2 exceeds the result of step 1, the partner received a discount for its interest in the asset.
Step 4.
Work out the amount of the premium or discount using the formula:
| Result of step 1 in the method
statement in subsection (1) Sum of results of step 1 in the method statement in subsection (1) for the partner for all of the *foreign hybrid ' s assets in relation to the *asset-based income tax regime |
× | Excess mentioned in
step 3 in the method statement in this subsection |
830-95(3)
The entity ' s tax cost setting amount for an asset at the start of the post-hybrid year in relation to an *asset-based income tax regime is equal to the sum of what the partners ' *tax costs for their interests in the asset would be at that time for the purpose of applying the asset-based income tax regime if the entity had continued to be a *foreign hybrid in relation to that income year.
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