Income Tax (Transitional Provisions) Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 705 - Tax cost setting amount for assets where entities become members of consolidated groups  

Subdivision 705-E - Expenditure relating to exploration, mining or quarrying  

SECTION 705-310   Adjustable value of head company ' s notional assets  

Application

705-310(1)    
If:

(a) section 40-35 , 40-37 , 40-40 or 40-43 of this Act treats the head company of the consolidated group as holding a notional asset at the joining time because expenditure is taken under section 701-5 (Entry history rule) of the Income Tax Assessment Act 1997 to be expenditure of the head company; and

(b) section 40-35 , 40-37 , 40-40 or 40-43 of this Act treated the joining entity as holding a notional asset just before the joining time because of the expenditure;

this section affects the adjustable value of the head company ' s notional asset.

Object

705-310(2)    
The object of this section is to ensure, by reducing the adjustable value of a notional asset of the head company, that the head company cannot get both:

(a) a deduction for the notional asset reflecting the amount of the expenditure relating to depreciating assets; and

(b) a deduction for that amount because of the decline in value of those depreciating assets.

Reduction at joining time for expenditure on depreciating assets

705-310(3)    
The opening adjustable value of the head company ' s notional asset for the income year that includes the joining time is so much of the adjustable value of the joining entity ' s notional asset just before the joining time as does not reasonably relate to any depreciating asset.

Note:

This offsets the increases in adjustable value of the head company ' s depreciating assets under subsection 705-305(3) .