New Business Tax System (Consolidation and Other Measures) Act 2003 (16 of 2003)

Schedule 1   Consolidation: amendments of various cost base provisions

Part 4   Adjustment to allocable cost amount for certain pre-joining time roll-overs from foreign residents

Income Tax Assessment Act 1997

14   After section 705-90

Insert:

705-93 If pre-joining time roll-over from foreign resident company - step 3A in working out allocable cost amount

When there is a step 3A amount

(1) For the purposes of step 3A in the table in section 705-60, there is a step 3A amount if:

(a) before the joining time:

(i) there was a roll-over under Subdivision 126-B (a Subdivision 126-B roll-over ) in relation to a *CGT event that happened in relation to an asset (the roll-over asset ); or

(ii) section 160ZZO of the Income Tax Assessment Act 1936 applied in relation to a disposal (a section 160ZZO roll-over ) of an asset (also the roll-over asset ); and

(b) the originating company in relation to the Subdivision 126-B roll-over, or the transferor in relation to the section 160ZZO roll-over, was a foreign resident; and

(c) the recipient company in relation to the Subdivision 126-B roll-over, or the transferee in relation to the section 160ZZO roll-over, was an Australian resident and was not the entity that became the *head company of the joined group; and

(d) between the Subdivision 126-B roll-over, or the section 160ZZO roll-over, and the joining time, no other CGT event happened in relation to the roll-over asset for which there was not a Subdivision 126-B roll-over or a section 160ZZO roll-over; and

(e) the roll-over asset is not a *pre-CGT asset at the joining time; and

(f) the roll-over asset becomes that of the head company of the joined group because subsection 701-1(1) (the single entity rule) applies when the joining entity becomes a *subsidiary member of the group.

What the step 3A amount is

(2) The step 3A amount is:

(a) if, as a result of the Subdivision 126-B roll-over mentioned in subparagraph (1)(a)(i), or the section 160ZZO roll-over mentioned in subparagraph (1)(a)(ii), a *capital loss of the originating company was disregarded or a capital loss of the transferor was not incurred - an increase amount equal to the capital loss; or

(b) if, as a result of the Subdivision 126-B roll-over mentioned in subparagraph (1)(a)(i), or the section 160ZZO roll-over mentioned in subparagraph (1)(a)(ii), a *capital gain of the originating company was disregarded or a capital gain of the transferor did not accrue - a reduction amount equal to the capital gain.