Income Tax (Transitional Provisions) Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 701 - Modified application of provisions of Income Tax Assessment Act 1997 for certain consolidated groups formed in 2002-03 and 2003-04 financial years  

Subdivision 701-B - Modified application of provisions  

SECTION 701-35   Act, transaction or event giving rise to CGT event for pre-formation roll-over after 16 May 2002 to be disregarded if cost base etc. would be different  

701-35(1)    

If:

(a) after 16 May 2002 and before the transitional group came into existence, a CGT event happened in relation to an asset (the roll-over asset ) for which there was:

(i) a roll-over under Subdivision 126-B of the Income Tax Assessment Act 1997 ; or

(ii) roll-over relief under section 40-340 of that Act in a case covered by item 4 of the table in subsection (1) of that section; and

(b) the cost base or reduced cost base of the roll-over asset or any other asset that:

(i) became an asset of the head company when the transitional group came into existence because subsection 701-1(1) (the single entity rule) of that Act applies; or

(ii) was otherwise an asset of the head company at that time;

differs at that time from what it would have been if the act, transaction or event that gave rise to the CGT event had not occurred in relation to the roll-over asset;

then the provisions mentioned in subsection (2) apply as if the act, transaction or event had not occurred in relation to the roll-over asset.

701-35(2)    

The provisions are:

(a) Division 705 of the Income Tax Assessment Act 1997 ; and

(b) provisions of this Act modifying the effect of that Division.

701-35(2A)    

Subsection (1) does not apply if:

(a) the act, transaction or event mentioned in subsection (1) happened before a demerger and in connection with the demerger; and

(b) before the transitional group came into existence, at least one of the following entities ceased to be a member of the demerger group because of the demerger:

(i) the originating company in relation to the roll-over, or the transferor in relation to the roll-over relief;

(ii) the recipient company, or the transferee in relation to the roll-over relief; and

(c) when the transitional group came into existence, at least one of those entities was not a member of that group.

701-35(3)    

Subsection (1) does not apply if:

(a) the roll-over asset is a membership interest in an entity (the test entity ); and

(b) when the CGT event happened:

(i) the originating company in relation to the roll-over, or the transferor in relation to the roll-over relief, was a foreign resident; and

(ii) the recipient company, or the transferee in relation to the roll-over relief, was an Australian resident; and

(c) when the transitional group came into existence, the test entity was a subsidiary member of the group, other than as a transitional foreign-held subsidiary of the group.