Income Tax Assessment Act 1997

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 ).

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 ).

Subdiv 705-B inserted by No 90 of 2002, s 3 and Sch 3 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 ).

S 705-150 repealed by No 56 of 2010, s 3 and Sch 5 item 48, applicable on and after 1 July 2002. S 705-150 formerly read:

SECTION 705-150 Adjustment to result of step 3A in working out allocable cost amount where pre-formation time roll-over from head company to member of wholly-owned group  
Object

705-150(1)
The object of this section is to ensure that, in working out the group's ^* allocable cost amount for certain entities that become ^* subsidiary members of the group at the formation time, an adjustment is made to take account of roll-overs under Subdivision 126-B or former section 160ZZO of the Income Tax Assessment Act 1936 before the formation time.

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History

S 705-150(1) amended by No 101 of 2006, s 3 and Sch 2 item 734, by amending the reference to a repealed inoperative provision, effective 14 September 2006. For application and savings provisions see the CCH Australian Income Tax Legislation archive .

When section applies

705-150(2)
This section applies if:

(a) before the formation time, there was a roll-over under Subdivision 126-B or former section 160ZZO of the Income Tax Assessment Act 1936 in relation to a ^* CGT event (the head company roll-over event ) that happened in relation to an asset (the head company roll-over asset ), where:

(i) an entity (the head company roll-over recipient ) that becomes a ^* subsidiary member of the group was the recipient company in relation to the roll-over; and

(ii) the originating company in relation to that roll-over was the entity that becomes the ^* head company of the group; and

(b) between the roll-over and the formation time, no other CGT event happened in relation to the head company roll-over asset:

(i) for which there was another roll-over satisfying the requirements of paragraph (a); or

(ii) for which there was not a roll-over under Subdivision 126-B or former section 160ZZO of the Income Tax Assessment Act 1936 ; and

(c) the head company roll-over asset is not a ^* pre-CGT asset at the formation time; and

(d) the sum of the ^* cost bases of all of the ^* head company's ^* CGT assets just before the head company roll-over event exceeded or was less than the sum of the cost bases of all of the head company's CGT assets just after the head company roll-over event (the excess or shortfall being the head company roll-over adjustment amount ).

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History

S 705-150(2) amended by No 101 of 2006, s 3 and Sch 2 items 735 and 736, by amending references to repealed inoperative provisions, effective 14 September 2006. For application and savings provisions see the CCH Australian Income Tax Legislation archive .

Adjustment to result of step 3A in allocable cost amount for head company roll-over recipient

705-150(3)
For the purpose of working out the group's ^* allocable cost amount for the head company roll-over recipient, the result of step 3A in the table in section 705-60 is increased (if the head company roll-over adjustment is an excess), or reduced (if the head company roll-over adjustment amount is a shortfall), by the amount worked out as follows:

* Market value of * head company's * membership interests in head company roll-over recipient Market value of all membership interests in head company roll-over recipient

×

Head company roll-over adjustment amount

where:

market value of all membership interests in head company roll-over recipient
means the ^* market value, at the formation time, of all ^* membership interests in the head company roll-over recipient that are held by entities that become ^* members of the group at that time.

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History

S 705-150(3) amended by No 16 of 2003, s 3 and Sch 1 item 26, by substituting " increased (if the head company roll-over adjustment is an excess), or reduced " for " reduced (if the head company roll-over adjustment amount is an excess), or increased " , 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 705-150(3) amended by No 16 of 2003, s 3 and Sch 1 items 17 and 18, by substituting " step 3A " for " step 3 " , effective 24 October 2002 and applicable on and after 1 July 2002 (see sec 700-1 of the Income Tax (Transitional Provisions) Act 1997 ).

Adjustment to result of step 3A in allocable cost amount for interposed entity

705-150(4)
Also, if this section applies, for the purpose of working out the group's ^* allocable cost amount for any entity (the target entity ) that:

(a) becomes a ^* subsidiary member of the group at the formation time; and

(b) is interposed at that time between the ^* head company and the head company roll-over recipient; and

(c) is the first or only such interposed entity;

the result of step 3A in the table in section 705-60 is increased (if the head company roll-over adjustment is an excess), or reduced (if the head company roll-over adjustment amount is a shortfall), by the amount worked out as follows:

* Market value of head company's indirect membership interests in head company roll-over recipient * Market value of all membership interests in head company roll-over recipient

×

Head company roll-over adjustment amount

where:

market value of all membership interests in head company roll-over recipient
has the same meaning as in subsection (3).

market value of head company's indirect membership interests in head company roll-over recipient
means so much of the ^* market value, at the formation time, of the ^* head company's ^* membership interests in the target entity as is attributable to membership interests that the entity holds directly, or indirectly through other interposed entities that become ^* subsidiary members of the group at the formation time, in the head company roll-over recipient.

Note:

If, after applying this section, the amount remaining as a result of step 3A in the table in section 705-60 is negative, the head company makes a capital gain equal to that amount: see CGT event L2.

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History

S 705-150(4) amended by No 16 of 2003, s 3 and Sch 1 item 26, by substituting " increased (if the head company roll-over adjustment is an excess), or reduced " for " reduced (if the head company roll-over adjustment amount is an excess), or increased " , 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 705-150(4) amended by No 16 of 2003, s 3 and Sch 1 items 18 to 21, by substituting " step 3A " for " step 3 " and substituting the note, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec 700-1 of the Income Tax (Transitional Provisions) Act 1997 ). The note formerly read:

Note: If under subsection (3) or (4) the amount by which the result of step 3 is to be reduced exceeds that result, the excess is treated as a capital gain of the head company.

S 705-150 inserted by No 90 of 2002, s 3 and Sch 3 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 ).