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  

165-CC tagged assets that affect tax cost setting amounts

SECTION 715-55   Step 2 amount is affected if liability of subsidiary member is 165-CC tagged asset of another group member and business continuity test is failed  

715-55(1)  
The amount (the comparison amount ) applicable under the table in subsection 705-75(2) (about reduction of the step 2 amount) for an accounting liability of the joining entity that is owed to a * member of the joined group at the joining time is reduced if:


(a) apart from this section, the comparison amount would be the * reduced cost base (if appropriate, as modified by a later provision of section 705-75 ) of the asset of that member that is constituted by the accounting liability; and


(b) the asset is at that time a * 165-CC tagged asset of that member, and that member owned it at the * changeover time; and


(c) that member ' s * final RUNL just before the joining time (as reduced by any reductions under section 715-50 ) was greater than nil; and


(d) that member does not satisfy the *business continuity test for:


(i) the period (the business continuity test period ) consisting of the * head company ' s * trial year; and

(ii) the time (the test time ) just before the * changeover time.
Note:

Paragraph (1)(c) has the effect that if both this section and section 715-50 apply to the same member of the joined group, section 715-50 is applied before this section.

715-55(2)  
If at the joining time that * member holds:


(a) 2 or * more assets constituted by accounting liabilities of the joining entity; or


(b) at least one asset constituted by an accounting liability of the joining entity, and at least one asset constituted by an accounting liability of another member of the group;

this section applies to each such asset in whichever order that member determines.

Amount of reduction

715-55(3)  
The comparison amount is reduced to the asset ' s * market value at the joining time.

715-55(4)  
However, if that member ' s * final RUNL (as reduced by any previous reductions under section 715-50 or this section) is less than the difference between:


(a) the * reduced cost base referred to in paragraph (1)(a); and


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

the comparison amount is instead reduced by that final RUNL.

715-55(5)  
That * final RUNL is reduced by the amount of the reduction under subsection (3) or (4).


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