Income Tax Assessment Act 1997
CHAPTER 3
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SPECIALIST LIABILITY RULES
PART 3-90
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CONSOLIDATED GROUPS
Division 705
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Tax cost setting amount for assets where entities become subsidiary members of consolidated groups
Subdivision 705-A
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Basic case: a single entity joining an existing consolidated group
Tax cost setting amount for assets that joining entity brings into joined group
SECTION 705-25 Tax cost setting amount for retained cost base assets 705-25(1)
This section states what the * tax cost setting amount is for a * retained cost base asset.
Australian currency
705-25(2)
If the * retained cost base asset is covered by paragraph (a), (b) or (ba) of the definition of that expression and is not covered by another subsection of this section, its * tax cost setting amount is equal to the amount of the Australian currency concerned.
Qualifying securities
705-25(3)
If the * retained cost base asset is a qualifying security (within the meaning of Division 16E of Part III of the Income Tax Assessment Act 1936 ), the * tax cost setting amount for the qualifying security is instead equal to the joining entity ' s * terminating value for the asset.
Entitlements to pre-paid services etc.
705-25(4)
If the * retained cost base asset is covered by paragraph (c) of the definition of that expression, its * tax cost setting amount is equal to the amount of the deductions to which the * head company is entitled under section 701-5 (the entry history rule) in respect of the expenditure that gave rise to the entitlement.
Financial arrangements to which Subdivision 250-E applies
705-25(4A)
The * tax cost setting amount is instead equal to the joining entity ' s * terminating value for the * retained cost base asset if the asset is a * financial arrangement to which Subdivision 250-E applies immediately before the joining time.
Rights to payments in respect of uncompleted work etc
705-25(4B)
If the * retained cost base asset is covered by paragraph (d) or (e) of the definition of that expression, its * tax cost setting amount is equal to the joining entity ' s * terminating value for the asset.
Retained cost base asset
705-25(5)
A retained cost base asset is: (a) Australian currency, other than * trading stock or * collectables of the joining entity; or (b) a right to receive a specified amount of such Australian currency, other than a right that is a marketable security within the meaning of section 70B of the Income Tax Assessment Act 1936 ; or
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Hide history noteSECTION 705-25 Tax cost setting amount for retained cost base assets 705-25(1)
This section states what the * tax cost setting amount is for a * retained cost base asset.
Australian currency
705-25(2)
If the * retained cost base asset is covered by paragraph (a), (b) or (ba) of the definition of that expression and is not covered by another subsection of this section, its * tax cost setting amount is equal to the amount of the Australian currency concerned.
Qualifying securities
705-25(3)
If the * retained cost base asset is a qualifying security (within the meaning of Division 16E of Part III of the Income Tax Assessment Act 1936 ), the * tax cost setting amount for the qualifying security is instead equal to the joining entity ' s * terminating value for the asset.
Entitlements to pre-paid services etc.
705-25(4)
If the * retained cost base asset is covered by paragraph (c) of the definition of that expression, its * tax cost setting amount is equal to the amount of the deductions to which the * head company is entitled under section 701-5 (the entry history rule) in respect of the expenditure that gave rise to the entitlement.
Note:
If the total amount to be treated as tax cost setting amounts for retained cost base assets exceeds the joined group ' s allocable cost amount for the joining entity, the head company makes a capital gain equal to the excess: see CGT event L3.
Financial arrangements to which Subdivision 250-E applies
705-25(4A)
The * tax cost setting amount is instead equal to the joining entity ' s * terminating value for the * retained cost base asset if the asset is a * financial arrangement to which Subdivision 250-E applies immediately before the joining time.
Rights to payments in respect of uncompleted work etc
705-25(4B)
If the * retained cost base asset is covered by paragraph (d) or (e) of the definition of that expression, its * tax cost setting amount is equal to the joining entity ' s * terminating value for the asset.
Retained cost base asset
705-25(5)
A retained cost base asset is: (a) Australian currency, other than * trading stock or * collectables of the joining entity; or (b) a right to receive a specified amount of such Australian currency, other than a right that is a marketable security within the meaning of section 70B of the Income Tax Assessment Act 1936 ; or
Example:(ba) a unit in a * cash management trust, if:
A debt or a bank deposit.
(i) the redemption value of the unit is expressed in Australian dollars; and
(c) a right to have something done under an * arrangement under which:
(ii) the redemption value of the unit cannot increase; or
(i) expenditure has been incurred in return for the doing of the thing; and
(d) a * right to future income (other than a * WIP amount asset); or (e) a * depreciating asset that the joining entity * holds as a result of a * balancing adjustment event mentioned in paragraph 417-30(2)(b) .
(ii) the thing is required or permitted to be done, or to cease being done, after the expenditure is incurred; or
Note 1:
There are some additional retained cost base assets for a joining entity that is a life insurance company: see Subdivision 713-L . The tax cost setting amount for those assets is worked out under that Subdivision.
Note 2:
The joining entity ' s right to receive lease payments under a lease is treated as a retained cost base asset in some circumstances (see paragraph 705-56(3)(b) ).