Income Tax (Transitional Provisions) Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 702 - Modified application of this Act to assets that an entity brings into a consolidated group  

SECTION 702-1   Modified application of section 40-77 of this Act to assets that an entity brings into a consolidated group  

702-1(1)    
This section applies if:

(a) an entity becomes a subsidiary member of a consolidated group; and

(b) just before it does so, section 40-77 of this Act applies to an asset that it holds.

702-1(2)    
For so long as the asset continues to be:

(a) an asset of the head company because subsection 701-1(1) (the single entity rule) of the Income Tax Assessment Act 1997 applies; or

(b) an asset of another entity, where it became such an asset as a result of that subsection ceasing to apply on the entity ceasing to be a subsidiary member of the group;

then, despite certain provisions of that Act applying, in accordance with subsection 701-55(2) of that Act, as if the asset were acquired for a payment equal to its tax cost setting amount:

(c) subsection 40-77(1) continues to apply to the asset; and

Note:

This means that Division 40 of the Income Tax Assessment Act 1997 continues not to apply to an asset that is a mining, quarrying or prospecting right.

(d) subsection 40-77(2) continues to apply to the asset, but applies as if the reference in that subsection to the cost of the asset were a reference to the cost worked out on the basis that the asset were acquired for a payment equal to its tax cost setting amount; and

(e) subsection 40-77(3) continues to apply to the asset, but applies as if the reference in that subsection to the amount included in assessable income under subsection 40-285(1) of that Act were a reference to the amount so worked out on the basis that the asset were acquired for a payment equal to its tax cost setting amount.