Income Tax Assessment Act 1997



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

Subdivision 705-E - Adjustments for errors etc.  

Operative provisions

SECTION 705-315   Errors that attract special adjustment action  

Section 705-320 (about later adjustments to correct * tax cost setting amount calculation errors) applies if the conditions in this section are satisfied.

Tax cost setting amount taken into account

The first condition is that the * head company of a * consolidated group worked out a * tax cost setting amount, in purported compliance with this Division, for an asset of an entity that becomes a * subsidiary member of the group that is an asset of a kind referred to in section 705-35 as a reset cost base asset.

Error in calculation

The second condition is that:

(a) the * head company made one or more errors in working out the * tax cost setting amount; and

(b) those errors caused the tax cost setting amount to differ from its correct amount.

If the errors caused the tax cost setting amount to be more, the difference is an overstated amount . If the errors caused the tax cost setting amount to be less, the difference is an understated amount .

Unreasonable to require recalculation

The third condition is that, having regard to the following factors:

(a) the net size of the errors compared to the size of the * allocable cost amount for the joining entity;

(b) the number of * tax cost setting amounts that would have to be recalculated, and the difficulty of making the recalculations;

(c) the number of adjustments, in assessments that could be amended and in future * income tax returns, that would be necessary to correct the errors;

(d) the difficulty in obtaining any necessary information;

it is not reasonable to require a recalculation of the amounts involved.

Exception where error due to fraud or evasion

However, the conditions in this section are not satisfied if the errors were to any extent due to fraud or evasion.

Requirement to notify

The * head company of the * consolidated group must, as soon as practicable after becoming aware that it made one or more errors in working out the * tax cost setting amount, notify the Commissioner in the * approved form:

(a) that it had made the errors; and

(b) of the amount of the overstated amount or understated amount.

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