New Business Tax System (Consolidation and Other Measures) Act 2003 (16 of 2003)
Schedule 4 Consolidation: adjustments for errors etc.
Part 2 Consequential amendments
Income Tax Assessment Act 1997
4 At the end of Division 104
Add:
104-525 Error in calculation of tax cost setting amount for joining entity's assets: CGT event L6
(1) CGT event L6 happens if:
(a) you are the *head company of a *consolidated group; and
(b) the conditions in section 705-315 (about errors in tax cost setting amounts) are satisfied for a *subsidiary member of the group; and
(c) you have a *net overstated amount or a *net understated amount for the subsidiary member.
(2) The time of the event is the start of the income year in which the Commissioner becomes aware of the errors.
(3) You work out whether you have a net overstated amount or net understated amount using this table:
|
Meaning of net overstated amount and net understated amount |
||
|---|---|---|
|
1 |
There are one or more overstated amounts under section 705-315 for the *subsidiary member but no understated amount under that section for the subsidiary member |
There is a net overstated amount. It is the overstated amount, or the sum of the overstated amounts. |
|
2 |
There are one or more understated amounts under section 705-315 for the *subsidiary member but no overstated amount under that section for the subsidiary member |
There is a net understated amount. It is the understated amount, or the sum of the understated amounts. |
|
3 |
There are both one or more overstated amounts and one or more understated amounts under section 705-315 for the *subsidiary member and the sum of the overstated amounts exceeds the sum of the understated amounts |
There is a net overstated amount. It is the difference between those sums |
|
4 |
There are both one or more overstated amounts and one or more understated amounts under section 705-315 for the *subsidiary member and the sum of the overstated amounts is less than the sum of the understated amounts |
There is a net understated amount. It is the difference between those sums |
(4) If the time when the Commissioner becomes aware of the errors is within the period within which the Commissioner may amend all of the assessments necessary to correct the errors, then, for the head company core purposes mentioned in subsection 701-1(2):
(a) if you have a *net overstated amount - you make a capital gain equal to that amount; or
(b) if you have a *net understated amount - you make a capital loss equal to that amount.
(5) If the time when the Commissioner becomes aware of the errors is not within that period, then, for the head company core purposes mentioned in subsection 701-1(2):
(a) if you have a *net overstated amount - you make a capital gain of the amount worked out under subsection (6); or
(b) if you have a *net understated amount - you make a capital loss of the amount worked out under subsection (6).
(6) The amount of the *capital gain or *capital loss is worked out as follows:
where:
current asset setting amount means the *tax cost setting amount for all assets referred to in subsection 705-315(2) as reset cost base assets that the *head company of the *consolidated group held continuously from the time when the *subsidiary member joined the group until the start of the head company's income year that is the earliest income year for which the Commissioner could amend the head company's assessment to correct any of the errors.
original asset setting amount means the *tax cost setting amount for all assets referred to in subsection 705-315(2) as reset cost base assets that the *subsidiary member held at the time it joined the group.
stated amount means the *net overstated amount or the *net understated amount, as the case requires.
104-530 Discharged amount of liability differs from amount for allocable cost amount purposes: CGT event L7
(1) CGT event L7 happens if you are the *head company of a *consolidated group and the conditions relating to a liability in subsection (3) are satisfied.
(2) The time of the event is the start of your income year in which the liability is discharged.
(3) The conditions are that:
(a) a liability of an entity that became a *subsidiary member of the group was taken into account in working out your *allocable cost amount for the subsidiary member in accordance with Division 705 (your ACA ); and
(b) the liability was later discharged (whether by the making of a payment or by the release, waiver or other extinguishment of the liability) and the sum (the realised amount ) of:
(i) the amount of any payment made to discharge the liability; and
(ii) the market value of any other consideration given to discharge the liability;
differs from the amount for the liability that was taken into account in working out your ACA; and
(c) that ACA is different to what it would have been (your true ACA ) if you had taken the realised amount into account in working out your ACA.
(4) You make a capital gain for the head company core purposes mentioned in subsection 701-1(2) if your ACA would have been smaller had you used the realised amount in working out your ACA. The amount of the gain is the difference between the amount you worked out and your true ACA.
(5) You make a capital loss for the head company core purposes mentioned in subsection 701-1(2) if your ACA would have been greater had you used the realised amount in working out your ACA. The amount of the loss is the difference between the amount you worked out and your true ACA.