Tax and Superannuation Laws Amendment (2014 Measures No. 4) Act 2014 (110 of 2014)

Schedule 3   Foreign resident CGT integrity measures

Part 1   Duplicated assets of corporate groups

Income Tax Assessment Act 1997

4   After section 855-30

Insert:

855-32 Disregard market value of duplicated non-TARP assets

(1) The purpose of this section is to prevent double counting of the *market value of the assets of a corporate group that:

(a) are not *taxable Australian real property; and

(b) are created under *arrangements under which corresponding liabilities are created in other members of the group.

(2) For the purposes of subsections 855-30(2) and (4), subsection (4) of this section applies to an asset that is not *taxable Australian real property if:

(a) the parties to an *arrangement included the 2 entities referred to in subsection (3); and

(b) an effect of the arrangement was to create, before the *CGT event happened:

(i) the asset as an asset of one of those 2 parties; and

(ii) a corresponding liability of the other (the other party ).

(3) The 2 entities are either:

(a) the first entity and the other entity (see subsection 855-30(3)), if table item 2 in subsection 855-30(4) applies to those entities; or

(b) both:

(i) that first entity or that other entity; and

(ii) an entity that is a first entity or other entity for the purposes of a related application of subsection 855-30(3) and table item 2 in subsection 855-30(4).

(4) Disregard:

(a) if the other party is the test entity (see subsection 855-30(2)) - the asset’s *market value; or

(b) otherwise - the percentage of the asset’s market value equal to the percentage that is the test entity’s *total participation interest in the other party.

Example: The test entity loans money to its wholly-owned subsidiary. The market value of the loan asset created as an asset of the test entity is disregarded for the purposes of subsection 855-30(2).