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

Schedule 2 Consolidation etc.

Part 13 Privatised assets

Income Tax (Transitional Provisions) Act 1997

75 At the end of Division 701

Add:

701-50 Increased allocable cost amount for leaving entity if it takes privatised asset brought into group by chosen transitional entity

Application

(1) This section provides for an addition to the step 1 amount for working out under section 711-20 of the Income Tax Assessment Act 1997 the allocable cost amount for an entity (the leaving entity ) that ceases to be a subsidiary member of the transitional group at a time (the leaving time ), if:

(a) the head company of the group holds an asset at the leaving time because the leaving entity is taken by subsection 701-1(1) of that Act to be a part of the head company; and

(b) the head company started to hold the asset because of that subsection when a chosen transitional entity became a subsidiary member of the group.

If entity sale situation affected asset's cost for chosen transitional entity

(2) If:

(a) at a time before the chosen transitional entity became a subsidiary member of the transitional group:

(i) all of that entity's ordinary income and statutory income was not assessable income; and

(ii) that entity held the asset; and

(b) just after that time, some or all of that entity's ordinary income and statutory income became assessable income because another entity that later became a member of the transitional group purchased all the membership interests in the entity; and

(c) the amount of the purchase price reasonably attributable to the asset exceeded the amount worked out under subsection (3);

the excess is added to the step 1 amount.

(3) Work out the amount for the purposes of paragraph (2)(c) using the following table:

Amount for paragraph (2)(c)
	If, because of the circumstances described in paragraphs (2)(a) and (b):	The amount is:
1	One of the following provisions applied to the entity: (a) section 61A of the Income Tax Assessment Act 1936; (b) Subdivision 57-I in Schedule 2D to the Income Tax Assessment Act 1936; (c) former subsection 58-20(4) of the Income Tax Assessment Act 1997	The difference between: (a) the amount treated as being the cost of the asset under that provision; and (b) the total amount treated under that provision as being the deductions for depreciation of the asset before the transition time mentioned in that provision
2	One of the following subsections of the Income Tax Assessment Act 1997 applied to the entity: (a) former subsection 58-20(5); (b) 58-70(3)	The amount treated as being the cost, or the first element of the cost, of the asset under that subsection

If asset sale situation affected asset's cost for chosen transitional entity

(4) If:

(a) on or after 4 August 1997, an entity (whether the chosen transitional entity or another entity) acquired the asset in connection with the acquisition of a business from the tax exempt vendor (within the meaning of those terms given by Division 58 of the Income Tax Assessment Act 1997, as that Division applied to the acquisition); and

(b) because of the acquisition, that Division directly or indirectly affected how much the chosen transitional entity could deduct for the asset; and

(c) that effect was partly due to the amount described in an item of the table being worked out for that entity directly or indirectly by reference to a provision of that Division specified in the item; and

(d) that amount is less than it would have been apart from that provision;

the difference is added to the step 1 amount.

Amounts and provisions for different dates of acquisition
	Date of the acquisition	Amount	Provision of Division 58 of the Income Tax Assessment Act 1997 applying to the acquisition and the working out of the amount
1	Before 1 July 2001	Cost of the asset	Former section 58-160
2	Before 1 July 2001	Cost of the asset	Former section 58-220
3	After 30 June 2001	First element of the cost of the asset	Subsection 58-70(5)

Note 1: As originally enacted, Division 58 of the Income Tax Assessment Act 1997 applied to acquisitions on or after 4 August 1997. That Act was later amended to replace Division 58, with the replacement Division 58 applying to acquisitions on or after 1 July 2001.

Note 2: Division 58 of the Income Tax Assessment Act 1997 may, for example, have indirectly affected how much the chosen transitional entity could deduct for the asset because:

(a) that Division affected the amount that could be deducted by an entity that held the asset before the chosen transitional entity; and

(b) that effect extended to the chosen transitional entity because of roll-over relief.

Copyright notice

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).