Tax Laws Amendment (2004 Measures No. 2) Act 2004 (83 of 2004)

Schedule 2   Consolidation etc.

Part 9   International tax

Division 1   Elections about valuing interests in FIFs held as trading stock

Income Tax Assessment Act 1997

49   At the end of Subdivision 717-G

Add:

717-320 Exit history rule does not affect when leaving entity may elect to value trading stock at market value

Section 701-40 (the exit history rule) does not affect the time limit set by subsection 70-70(3) for the leaving entity to make an election under subsection 70-70(2).

Note: Subsection 70-70(2) lets the leaving entity elect to value at market value interests in a FIF that are trading stock of the entity.

Example: At the leaving time the single entity rule stopped applying to the leaving entity, causing it to start holding as trading stock an interest in a FIF that the head company of the group had earlier held as trading stock. The leaving entity had not held an interest in any FIF as trading stock before becoming a subsidiary member of the group.

Subsection 70-70(3) and this section let that entity make an election under subsection 70-70(2) before lodging its income tax return for the first income year that:

(a) ends after the leaving time; and

(b) is an income year in which a notional accounting period for the FIF ends.