Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 715 - Interactions between this Part and other areas of the income tax law  

Subdivision 715-A - Treatment of unrealised losses existing when ownership or control of a company changes before or during consolidation  

Effect of assets in loss denial pool of head company becoming assets of leaving entity

SECTION 715-130   Second choice: pool's loss denial balance applied in reducing adjustable values of leaving assets that are loss assets  

715-130(1)  
The second choice is to reduce under this section the * adjustable value of each leaving asset (a loss asset ) for which the * head company would have had a notional capital loss, or notional revenue loss, under section 165-115F at the time (the test time ) just before the leaving time if the test time had been a * changeover time for the head company. The choice has effect accordingly.

Note:

The consequences of the choice are worked out under this section and section 715-145 .

715-130(2)  
If:


(a) 2 or more entities cease to be * subsidiary members of the * consolidated group; and


(b) 2 or more of them make the second choice;

the choices have effect in the same order as the entities cease being subsidiary members. If 2 or more of the entities ceased at the same time, their choices have effect in whichever order the * head company determines.

715-130(3)  
This section applies to each of the loss assets in order, according to their respective * adjustable values (apart from this section) at the test time: from largest to smallest. (If an asset has more than one such adjustable value, use the greater or greatest of them.)

715-130(4)  
At the test time, the * adjustable value of the loss asset is reduced to the asset's * market value at that time.

715-130(5)  
However, if the * loss denial balance (as reduced by any previous reductions under this section or section 715-160 ) of the * head company ' s * loss denial pool is less than the difference between:


(a) the * adjustable value of the loss asset (apart from this section ) at the test time; and


(b) the asset's * market value at the test time;

the adjustable value is instead reduced at the test time by that loss denial balance.

715-130(6)  
That * loss denial balance is reduced at the leaving time by the amount of the reduction under subsection (3) or (4). If 2 or more such reductions are made for the same asset (because it has 2 or more different characters), that loss denial balance is reduced by the greater or greatest of the reductions.


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