Tax Laws Amendment (Taxation of Financial Arrangements) Act 2009 (15 of 2009)

Schedule 1   Amendments

Part 2   Consequential amendments

Income Tax Assessment Act 1997

87   After section 701-60

Insert:

701-61 Assets in relation to Division 230 financial arrangement - head company’s assessable income or deduction

(1) This section applies if:

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

(b) paragraph 701-55(5A)(b) applies in relation to one or more assets of the joining entity.

(2) Work out if the total of the *Division 230 starting values for those assets exceeds or falls short of the total of their *tax cost setting amounts.

(3) If there is an excess, an amount equal to 25% of that excess is included in the *head company’s assessable income for:

(a) the income year in which the particular time mentioned in subsection 701-55(5A) occurs; and

(b) each of the 3 subsequent income years.

(4) If there is a shortfall, the *head company is entitled to a deduction equal to 25% of that shortfall for:

(a) the income year in which the particular time mentioned in subsection 701-55(5A) occurs; and

(b) each of the 3 subsequent income years.