INCOME TAX (TRANSITIONAL PROVISIONS) ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 701 - Modified application of provisions of Income Tax Assessment Act 1997 for certain consolidated groups formed in 2002-03 and 2003-04 financial years  

Subdivision 701-B - Modified application of provisions  

SECTION 701-40   When entity leaves transitional group, head company may choose, for purposes of transitional group ' s allocable cost amount, to increase terminating values of over-depreciated assets  

701-40(1)  


This section applies if an entity ceases to be a subsidiary member of the transitional group and the requirements of subsections (2) to (4) are satisfied. Asset held at leaving time

701-40(2)  
Just before the entity ceases to be a subsidiary member, it must, disregarding subsection 701-1(1) (the single entity rule) of the Income Tax Assessment Act 1997 , hold an asset. Reduction of asset ' s tax cost setting amount for over-depreciation

701-40(3)  
When the transitional group came into existence:


(a) the asset must have become that of the head company of the transitional group because subsection 701-1(1) of that Act applied in relation to a transitional entity; and


(b) former section 705-50 of that Act must have reduced by an amount (the reduction amount ) the tax cost setting amount for the asset.

Asset held continuously within group

701-40(4)  
The asset must, disregarding subsection 701-1(1) of that Act, have been held at all times by the head company or a subsidiary member of the transitional group from when the transitional group came into existence until the entity ceases to be a subsidiary member of the transitional group.

701-40(5)  
(Repealed by No 56 of 2010)

Head company ' s choice

701-40(6)  
If this section applies, the head company may, in relation to the entity ' s ceasing to be a subsidiary member, choose that the terminating value for the asset, that is to be used in applying step 1 of the table in section 711-20 of the Income Tax Assessment Act 1997 , is increased by so much of the reduction amount as the head company chooses.




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