New Business Tax System (Consolidation, Value Shifting, Demergers and Other Measures) Act 2002 (90 of 2002)

Schedule 14   Loss integrity rules: global method of valuing assets

Part 1   Income Tax Assessment Act 1997

11   After subsection 165-115U(1)

Insert:

(1A) Step 1 in the method statement in subsection (1) does not apply to an amount that was counted at an earlier alteration time if the company has chosen to use the*global method of working out whether it has an adjusted unrealised loss at that earlier time.

(1B) The global method of working out whether the company has an adjusted unrealised loss at the relevant alteration time is as follows:

Method statement

Step 1. Work out the total market value of all*CGT assets that the company owned at the relevant alteration time (including those it*acquired for less than $10,000), using a valuation method that would generally be regarded as appropriate in the circumstances.

Step 2. Work out the total of the*cost bases of those*CGT assets at the relevant time.

Note: If a CGT asset that the company owned at the relevant time was also trading stock or a revenue asset at that time, see subsection (1C) of this section.

Step 3. If the step 2 amount exceeds the step 1 amount, the excess is the company's adjusted unrealised loss at the relevant time.

(1C) If:

(a) a*CGT asset that the company owned at the relevant alteration time was also*trading stock or a*revenue asset at that time; and

(b) the asset's*cost base at the relevant alteration time isless than the amount that, if the relevant alteration time were a changeover time, would be compared under section 165-115F with the asset's market value in working out a notional revenue gain or notional revenue loss that the company would have at the changeover time in respect of the asset;

then, for the purposes of step 2 of the method statement in subsection (1B) of this section, the amount that would be so compared is to be taken into accountinstead of that cost base.

(1D) A choice to use the*global method must be made on or before:

(a) the day on which the company lodges its income tax return for the income year in which the relevant alteration time occurred; or

(b) such later day as the Commissioner allows.