Income Tax Assessment Act 1997



Division 711 - Tax cost setting amount for membership interests where entities cease to be subsidiary members of consolidated groups  

Tax cost setting amount for membership interests etc.  

SECTION 711-35   If head company becomes entitled to certain deductions - step 2 in working out allocable cost amount  


Work out the step 2 amount for the purposes of the table in subsection 711-20(1) by multiplying all deductions covered by subsection (2) by the *corporate tax rate.

This subsection covers any deduction to which the leaving entity becomes entitled under section 701-40 as a result of the leaving entity ceasing to be a * subsidiary member of the old group, other than a deduction for expenditure:

(a) that is, forms part of or reduces, the cost of an asset that becomes an asset of the leaving entity because subsection 701-1(1) (the single entity rule) ceases to apply; or

(b) to which section 110-40 (about expenditure on assets acquired before 7.30 pm on 13 May 1997) applies.


Subsection (2) does not cover a deduction under section 43-15 (which relates to *undeducted construction expenditure) if, because of section 701-40 (the exit history rule), the leaving entity is taken to have *acquired the asset to which the deduction relates at or before 7.30 pm, by legal time in the Australian Capital Territory, on 13 May 1997.

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