Income Tax Assessment Act 1997
(a) section 715-245 or 715-250 applies; and
(b) the leaving entity is a * loss company at the leaving time; and
(ba) the *head company has a relevant equity interest under section 165-115X in the leaving entity at the leaving time;
the head company must choose whether subsection (2) or (3) of this section has effect for the purposes of applying, to each * membership interest in the leaving entity, in relation to the time just before the leaving time, whichever of these provisions is appropriate:
(c) subsection 701-55(3) (about trading stock);
(d) subsection 701-55(5) , but only so far as it relates to working out the * reduced cost base of a * membership interest that was * acquired on or after 20 September 1985;
(e) subsection 701-55(6) (about revenue assets).
Section 701-55 is about setting the tax cost of an asset.
For the purposes of paragraph (1)(ba), in determining whether the *head company has the relevant equity interest, disregard the operation of subsection 701-1(1) (the single entity rule) in applying subsections 165-115X(2C) and 165-115X(4) .
If the * head company chooses this subsection, the interest ' s * tax cost setting amount (apart from this section) just before the leaving time is reduced to nil. 715-255(3)
If the * head company chooses this subsection, the interest ' s * tax cost setting amount (apart from this section) just before the leaving time is reduced by the adjustment amount under section 165-115ZB , which is calculated on the basis that:
(a) just before the leaving time, all the * membership interests in the leaving entity constituted a single relevant equity interest under section 165-115X that the head company had in the leaving entity; and
(b) the adjustment amount is worked out and applied in accordance with subsection 165-115ZB(6) , but disregarding the paragraphs of that subsection except paragraphs 165-115ZB(6)(a) and (d). 715-255(4)
The * head company ' s choice must be made within 6 months after the leaving time, or within a further period allowed by the Commissioner. 715-255(5)
After that 6 months, or that further period, the head company is taken to have chosen subsection (2) unless it is established that the head company made a different choice within that 6 months or further period. Non-membership equity interests 715-255(6)
Subsection 711-15(2) (which treats *non-membership equity interests as *membership interests) also applies for the purposes of this section, on the basis that the *consolidated group referred to in section 715-240 is the old group referred to in that subsection.