Taxation Determination

TD 2004/65A1 - Addendum

Income tax: consolidation: capital gains: does section 104-530 (CGT event L7) of the Income Tax Assessment Act 1997 apply where:

(a)

an entity becomes a member of a consolidated group;

(b)

the entity owes a liability to another member of the group at that time; and

(c)

the liability is later discharged?

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Addendum

This Addendum amends Taxation Determination TD 2004/65 to take into account the changes introduced by Schedule 5 to the Tax Laws Amendment (2010 Measures No. 1) Act 2010.

TD 2004/65 is amended as follows:

1. Paragraph 2

Omit the paragraph; substitute:

2. Under CGT event L7, if the amount of a liability taken into account in working out the allocable cost amount (ACA) for an entity that becomes a member of a consolidated group is later discharged for a different amount (the realised amount), the head company may make a capital loss. A capital loss will arise if the liability is discharged by the head company on or after 1 July 2002 and before 10 February 2010 and the ACA would have been greater had the realised amount been taken into account in working out the ACA.

2. Paragraph 5

Omit 'years commencing both before and after its date of issue'; substitute 'a capital loss under CGT event L7 that arises on or after 1 July 2002 and before 10 February 2010.'.

This Addendum applies on and after 1 July 2002, the date of application of the amendments to the Income Tax Assessment Act 1997 made by Part 12 of Schedule 5 to Tax Laws Amendment (2010 Measures No. 1) Act 2010. The effect of the amendments is that TD 2004/65 will only apply where a capital loss arises under CGT event L7 before 10 February 2010.

Commissioner of Taxation
22 June 2011

References

ATO references:
NO 1-2GGFW7U