INCOME TAX ASSESSMENT ACT 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 855 - Capital gains and foreign residents  

Subdivision 855-A - Disregarding a capital gain or loss by foreign residents  

SECTION 855-32   Disregard market value of duplicated non-TARP assets  

855-32(1)  
The purpose of this section is to prevent double counting of the *market value of the assets of a corporate group that:


(a) are not *taxable Australian real property; and


(b) are created under *arrangements under which corresponding liabilities are created in other members of the group.

855-32(2)  
For the purposes of subsections 855-30(2) and (4) , subsection (4) of this section applies to an asset that is not *taxable Australian real property if:


(a) the parties to an *arrangement included the 2 entities referred to in subsection (3); and


(b) an effect of the arrangement was to create, before the *CGT event happened:


(i) the asset as an asset of one of those 2 parties; and

(ii) a corresponding liability of the other (the other party ).

855-32(3)  
The 2 entities are either:


(a) the first entity and the other entity (see subsection 855-30(3) ), if table item 2 in subsection 855-30(4) applies to those entities; or


(b) both:


(i) that first entity or that other entity; and

(ii) an entity that is a first entity or other entity for the purposes of a related application of subsection 855-30(3) and table item 2 in subsection 855-30(4) .

855-32(4)  
Disregard:


(a) if the other party is the test entity (see subsection 855-30(2) ) - the asset ' s *market value; or


(b) otherwise - the percentage of the asset ' s market value equal to the percentage that is the test entity ' s *total participation interest in the other party.

Example:

The test entity loans money to its wholly-owned subsidiary. The market value of the loan asset created as an asset of the test entity is disregarded for the purposes of subsection 855-30(2) .


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