Tax Laws Amendment (2004 Measures No. 6) Act 2005 (23 of 2005)

Schedule 1   Consolidation

Part 4   Expenditure relating to mining or quarrying

Income Tax Assessment Act 1997

8   Section 716-100 (link note)

Repeal the link note, substitute:

Subdivision 716-E - Tax cost setting for exploration and prospecting assets

Table of sections

716-300 Prime cost method of working out decline in value

716-300 Prime cost method of working out decline in value

(1) This section has effect if:

(a) an entity (the joining entity ) becomes a *subsidiary member of a *consolidated group at a time (the joining time ); and

(b) because of subsection 40-80(1), the joining entity could (or did) deduct for a period before the joining time the *cost of a *depreciating asset that became an asset of the *head company of the group at the joining time because section 701-1 (Single entity rule) applied to the joining entity; and

(c) the joining entity could not deduct an amount under Subdivision 40-B (except because of subsection 40-80(1)) for the income year that includes the joining time for that cost.

Note: Subdivision 40-B allows deductions for the decline in value of depreciating assets. Subsection 40-80(1), which is in that Subdivision, provides that the decline in value of certain assets used for exploration and prospecting equals their cost.

(2) Subsection 701-55(2) has effect as if the *prime cost method for working out the decline in value of the *depreciating asset applied just before the joining time.

Note: This may affect both the method of working out the decline in value of the asset and the asset's effective life.