CHAPTER 3
-
SPECIALIST LIABILITY RULES
PART 3-90
-
CONSOLIDATED GROUPS
History
Part 3-90 inserted by No 68 of 2002, s 3 and Sch 1 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec
700-1
of the
Income Tax (Transitional Provisions) Act 1997
).
Division 705
-
Tax cost setting amount for assets where entities become subsidiary members of consolidated groups
History
Div 705 inserted by No 68 of 2002, s 3 and Sch 1 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec
700-1
of the
Income Tax (Transitional Provisions) Act 1997
).
Subdivision 705-A
-
Basic case: a single entity joining an existing consolidated group
History
Subdiv 705-A inserted by No 68 of 2002, s 3 and Sch 1 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec
700-1
of the
Income Tax (Transitional Provisions) Act 1997
).
Tax cost setting amount for assets that joining entity brings into joined group
SECTION 705-35
Tax cost setting amount for reset cost base assets
705-35(1)
For each asset of the joining entity (a
reset cost base asset
) that is not a
*
retained cost base asset, the asset
'
s
*
tax cost setting amount is worked out by:
(a)
first working out the joined group
'
s
*
allocable cost amount for the joining entity in accordance with section
705-60
; and
(b)
then reducing that amount by the total of the
*
tax cost setting amounts for each retained cost base asset (but not below zero); and
(c)
finally, allocating the result to each of the joining entity
'
s reset cost base assets in proportion to their
*
market values.
Note 1:
For an asset consisting of an entitlement to receive an amount that will be included in assessable income, the market value of the asset would take into account the tax payable on the amount.
Note 1A:
If a set of linked assets and liabilities includes one or more reset cost base assets, section
705-59
may affect how this section applies. In particular, that section may exclude the application of paragraph
705-35(1)(b)
to retained cost base assets in the set; this in turn may affect the application of CGT event L3.
Note 2:
If there are no reset cost base assets, the result is instead treated as a capital loss of the head company: see CGT event L4.
History
S 705-35(1) amended by No 99 of 2012, s 3 and Sch 3 items 37 and 38, by omitting
"
or an asset (an
excluded asset
) covered by subsection (2)
"
after
"
*
retained cost base asset
"
and omitting
"
(other than excluded assets)
"
after
"
reset cost base assets
"
in para (c), effective 29 June 2012. For application provisions see note under s
701-55(5C)
.
S 705-35(1) amended by No 56 of 2010, s 3 and Sch 5 item 133, by omitting
"
in accordance with section 705-25
"
after
"
*tax cost setting amounts
"
in para (b). For application provision see note under s
705-27
.
S 705-35(1) amended by No 67 of 2003, s 3 and Sch 3 item 2, by inserting Note 1A after Note 1, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec
700-1
of the
Income Tax (Transitional Provisions) Act 1997
).
S 705-35(1) amended by No 16 of 2003, s 3 and Sch 21 item 6, by inserting
"
: see CGT event L4
"
at the end of Note 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec
700-1
of the
Income Tax (Transitional Provisions) Act 1997
).
705-35(2)
(Repealed by No 99 of 2012)
History
S 705-35(2) repealed by No 99 of 2012, s 3 and Sch 3 item 39, effective 29 June 2012. For application provisions see note under s
701-55(5C)
. S 705-35(2) formerly read:
Excluded assets
705-35(2)
An asset is covered by this subsection if, under any of the steps in the table in section
705-60
, the joined group
'
s
*
allocable cost amount for the joining entity is reduced by an amount in respect of the asset.
Note:
An example is an entitlement to a deduction, for which there is a reduction under step 2 in the table.
Goodwill resulting from ownership and control of the joining entity
705-35(3)
If, just after the joining time, the
*
head company has, because of its ownership and control of the joining entity, a goodwill asset associated with assets or businesses of the joined group:
(a)
for the head company core purposes, the asset
'
s
*
tax cost is set at the joining time at its
*
tax cost setting amount; and
(b)
for the purpose of doing so:
(i)
the asset is taken to be an asset of the joining entity that becomes an asset of the head company because subsection
701-1(1)
(the single entity rule) applies; and
(ii)
it is taken to have a
*
market value just before the joining time of an amount equal to its market value just after the joining time.
History
S 705-35 inserted by No 68 of 2002, s 3 and Sch 1 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec
700-1
of the
Income Tax (Transitional Provisions) Act 1997
).
View history note
Hide history note