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  

Tax cost setting amount for assets that joining entity brings into joined group

SECTION 705-40   Tax cost setting amount for reset cost base assets held on revenue account etc.  

705-40(1)  


The * tax cost setting amount for a reset cost base asset that is * trading stock, a * depreciating asset, a * registered emissions unit or a * revenue asset must not exceed the greater of:


(a) the asset ' s * market value; and


(b) the joining entity ' s * terminating value for the asset.

705-40(2)  


If subsection (1) reduces the asset ' s * tax cost setting amount, the amount of the reduction is allocated among the other reset cost base assets (including other * trading stock, * depreciating assets, *registered emissions units and * revenue assets), so as to increase their tax cost setting amounts, in accordance with the principles set out in subsection (3).
Note:

If any of the amount of the reduction cannot be allocated, it is instead treated as a capital loss of the head company: see CGT event L8.

705-40(3)  
These are the principles:


(a) the allocation is to be in proportion to the * market values of the assets;


(b) the amount allocated to an item of * trading stock, to a * depreciating asset, to a *registered emissions unit or to a * revenue asset must not cause its * tax cost setting amount to contravene subsection (1);


(c) any of the amount that cannot be allocated is to be reallocated, to the maximum extent possible, among the remaining reset cost base assets by applying this subsection a further one or more times.


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