Income Tax Assessment Act 1997
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Hide history noteSECTION 705-60 705-60 What is the joined group ' s allocable cost amount for the joining entity?
Work out the joined group ' s allocable cost amount for the joining entity in this way:
| Working out the joined group ' s allocable cost amount for the joining entity | ||
| Step | What the step requires | Purpose of the step |
| 1 | Start with the step 1 amount worked out under section 705-65, which is about the cost of * membership interests in the joining entity held by * members of the joined group | To ensure that the allocable cost amount includes the cost of * acquiring the membership interests |
| 2 | Add to the result of step 1 the step 2 amount worked out under section 705-70, which is about the value of the joining entity ' s liabilities | To ensure that the joining entity ' s liabilities at the joining time, which are part of the joined group ' s cost of acquiring the joining entity, are reflected in the allocable cost amount |
| 3 | Add to the result of step 2 the step 3 amount worked out under:
(a) section 705-90, which is about undistributed, taxed profits accruing to the joined group before the joining time; or (b) if the joining entity is a trust (and not a * corporate tax entity) - section 713-25, which is about undistributed, realised profits accruing to the joined group before the joining time that could be distributed tax free |
To increase the allocable cost amount:
(a) to reflect the undistributed, taxed profits and so prevent double taxation; or (b) if the joining entity is a trust - to reflect the undistributed, realised profits that could be distributed tax free |
| 3A | For each step 3A amount (if any) under section 705-93 (which is about pre-joining time roll-overs):
(a) if the step 3A amount is a *deferred roll-over loss - add to the result of step 3 (as affected by any previous application of this step) the step 3A amount; or (b) if the step 3A amount is a *deferred roll-over gain - subtract from the result of step 3 (as affected by any previous application of this step) the step 3A amount |
To adjust for certain roll-overs before the joining time affecting deferred gains and losses |
| 4 | Subtract from the result of step 3A the step 4 amount worked out under section 705-95, which is about pre-joining time distributions out of certain profits | To prevent the allocable cost amount reflecting return of part of the amount paid to * acquire the * membership interests in the joining entity |
| 5 | Subtract from the result of step 4 the step 5 amount worked out under section 705-100, which is about certain losses accruing to the joined group before the joining time | To prevent:
(a) a double benefit arising from the losses; and (b) losses that cannot be transferred to the * head company, or are cancelled by the head company, under Subdivision 707-A being reinstated in an unrealised form or reducing unrealised gains. |
| 6 | Subtract from the result of step 5 the step 6 amount worked out under section 705-110, which is about losses that the joining entity transferred to the * head company under Subdivision 707-A | To stop the joined group getting benefits both through higher * tax cost setting amounts for the joining entity ' s assets and through losses transferred to the head company |
| 7 | Subtract from the result of step 6 the step 7 amount worked out under section 705-115, which is about certain deductions to which the * head company is entitled | To stop the joined group getting benefits both through the * tax cost of the joining entity ' s assets being set and through certain tax deductions of the joining entity being inherited by the head company |
| 8 | If the remaining amount is positive, it is the joined group ' s allocable cost amount. Otherwise the joined group ' s allocable cost amount is nil. |
Note:
The head company may be taken to have made a capital gain, depending on the amount remaining after applying step 3A: see CGT event L2.
[ CCH Note: S 705-60 will be amended by No 23 of 2024, s 3 and Sch 2 items 4A - 6, by inserting table item 5A, substituting " step 5A " for " step 5 " in table item 6, column headed " What the step requires " , inserting table item 6A and substituting " step 6A " for " step 6 " in table item 7, column headed " What the step requires " , effective 1 July 2024. For application provisions, see note under s 705-60 . Table items 5A and 6A will read:
5A Subtract from the result of step 5 the step 5A amount worked out under section 705-102 , which is about certain *FRT disallowed amounts accruing to the joined group before the joining time To prevent a double benefit arising from the FRT disallowed amounts 6A Subtract from the result of step 6 the step 6A amount worked out under section 705-112 , which is about *FRT disallowed amounts that the joining entity transferred to the *head company under section 820-590 To stop the joined group getting benefits both through higher *tax cost setting amounts for the joining entity ' s assets and through FRT disallowed amounts transferred to the head company
No 23 of 2024, s 3 and Sch 2 items 144
-
146 contain the following application provisions:
after that commencement, the choice continues to have effect as if it were a choice set out in that item as amended by Part 1.
Australian plantation forestry entity
old law
144 Application
(1)
Subject to this Part, the amendments made by Part 1 of this Schedule apply in relation to assessments for income years starting on or after 1 July 2023.
(2)
However, the amendments made by that Part to section
820-980
of the
Income Tax Assessment Act 1997
do not apply in relation to records mentioned in that section (disregarding those amendments) that relate to one or more income years starting before 1 July 2023.
(3)
Despite subitem (1), Subdivision
820-EAA
of the
Income Tax Assessment Act 1997
, as inserted by Part 1 of this Schedule, applies in relation to assessments for income years starting on or after 1 July 2024.
145 Transitional
-
choice
If:
(a)
before the commencement of this Part, an entity made a choice set out in item 1 of the table in subsection
820-430(1)
of the
Income Tax Assessment Act 1997
; and
(b)
immediately before that commencement, the choice had effect;
(1)
Despite the amendments made by Part 1 of this Schedule, the old law continues to apply in relation to assessments for income years starting on or after 1 July 2023 for entities that are Australian plantation forestry entities for a period that is all or part of the income year, as if the amendments had not been made.
(2)
In this item:
, at a particular time, means an entity that solely or predominantly carries on a business, at that time, of establishing and tending trees for felling in Australia.
means the following provisions, as in force immediately before the commencement of this item:
(a)
Division
820
of the
Income Tax Assessment Act 1997
;
(b)
any other provision of that Act to the extent that it relates to that Division;
(c)
any provision in an instrument (whether legislative or administrative) made under that Act to the extent that it relates to that Division.
]
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