Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 705 - Tax cost setting amount for assets where entities become subsidiary members of consolidated groups  

Subdivision 705-A - Basic case: a single entity joining an existing consolidated group  

How to work out the allocable cost amount

SECTION 705-75   Liabilities of the joining entity - reductions for purposes of step 2 in working out allocable cost amount  

Reduction for future deduction

705-75(1A)  


Subsection (1) applies to an accounting liability to the extent that it is a liability of a kind described in:


(a) paragraph 705-70(1AC)(c) ; or


(b) paragraph 705-70(1AC)(d) .

705-75(1)  


If some or all of an accounting liability will result in a deduction to the *head company, the amount to be added for the accounting liability under subsection 705-70(1) is reduced by the following amount:


[ Deduction × *Corporate tax rate] - Double-counting adjustment

where:

double-counting adjustment
means the amount of any reduction that has already occurred in the accounting liability under subsection 705-70(1) to take account of the future availability of the deduction.

Reduction for intra-group liabilities

705-75(2)  
If the amount of an accounting liability of the joining entity that is owed to a *member of the joined group is more than the amount applicable under the following table, the amount to be added for the accounting liability under subsection 705-70(1) instead equals the amount applicable under the table.


Graphic
Graphic
Amount applicable
Item If the market value of the member ' s asset constituted by the accounting liability is ... The amount applicable is ...
1 equal to or greater than the asset ' s *cost base the asset ' s cost base
2 less than the asset ' s *cost base but greater than its *reduced cost base the asset ' s *market value
3 less than or equal to the asset ' s *reduced cost base the asset ' s reduced cost base

Application of subsections 705-65(2), (3), (3AA) and (3A)

705-75(3)  


Subsections 705-65(2) , (3), (3AA) and (3A) apply in relation to references in subsection (2) of this section to an asset ' s *cost base or *reduced cost base in a corresponding way to that in which they apply in relation to references in the table in subsection 705-65(1) to a *membership interest ' s cost base or reduced cost base. Application of subsection 705-65(4)

705-75(4)  


Subsection 705-65(4) applies in relation to assets mentioned in subsection (2) of this section in a corresponding way to that in which it applies in relation to members ' *membership interests. Reduction in reduced cost base under subsection 165-115ZA(3) to be added back

705-75(5)  


If:


(a) in working out the *reduced cost base of a *member ' s asset for the purposes of subsection (2), a reduction has taken place under subsection 165-115ZA(3) (about alterations in ownership or control of loss companies); and


(b) the reduction is to some extent attributable to so much of an amount that was taken into account both in working out the amount of the reduction and in working out:


(i) the step 5 amount under section 705-100 ; or

(ii) the step 6 amount under section 705-110 ;

the reduced cost base is, to the extent mentioned in paragraph (b), increased by:


(c) if subparagraph (b)(i) applies - the amount of that reduction; or


(d) if subparagraph (b)(ii) applies - the amount of that reduction multiplied by the *corporate tax rate.


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