Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 701 - Core rules  

Entity rules  

SECTION 701-50   Cost of certain membership interests of which entity becomes holder on leaving group  

701-50(1)    
If:

(a) the entity and one or more other entities cease to be ^* subsidiary members of the group at the same time because of an event happening in relation to one of them; and

(b) when the entity ceases to be a subsidiary member, it holds an asset consisting of a ^* membership interest in any of the other entities;

this section has effect for the entity core purposes.

Object

701-50(2)    
The cost of any ^* membership interest that one of the entities holds in another is to be treated in the same way as membership interests held by the ^* head company. In both cases the object is to preserve the alignment of costs for membership interests and assets (that was established when each entity became a ^* subsidiary member) by recognising the cost of those interests, when it ceases to be a subsidiary member, as an amount equal to the cost of the entity's assets at that time reduced by the amount of its liabilities.

Setting tax cost of membership interests

701-50(3)    
The asset's ^* tax cost is set just before the entity ceases to be a ^* subsidiary member of the group at the asset's ^* tax cost setting amount.

Note:

If the asset consists of a membership interest in a partnership, Subdivision 713-E sets the tax cost of interests in partnership assets, rather than membership interests in the partnership.