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).