INCOME TAX (TRANSITIONAL PROVISIONS) ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 701C - Modified application etc. of provisions of Income Tax Assessment Act 1997: transitional foreign-held membership structures  

Subdivision 701C-C - Modifications of tax cost setting rules  

Basic modification

SECTION 701C-30   701C-30   Transitional foreign-held subsidiary to be treated as part of head company  


The following provisions:


(a) section 701-10 of the Income Tax Assessment Act 1997 (about setting the tax cost of assets that an entity brings into the group);


(b) Subdivision 705-A of that Act, in its application in accordance with Subdivision 705-B of that Act;

apply, for the purposes of setting the tax cost of an asset of the transitional foreign-held joining entity at the formation time, as if each subsidiary member of the group that is a transitional foreign-held subsidiary at the formation time were a part of the head company of the group, rather than a separate entity.

Note 1:

This section means that references in those provisions to matters internal to the group operate as if transitional foreign-held subsidiaries in the group were parts of the head company of the group. For example:

  • (a) provisions operating if the head company holds (whether directly or indirectly) membership interests in another entity operate even if a transitional foreign-held subsidiary actually holds those interests; and
  • (b) provisions operating if the head company owns or controls another entity operate even if one or more transitional foreign-held subsidiaries actually own or control that other entity; and
  • (c) provisions operating if an entity is interposed between the head company and another entity operate even if the first entity is actually interposed between a transitional foreign-held subsidiary and the other entity.
  • Note 2:

    If the transitional foreign-held joining entity is a transitional foreign-held subsidiary, this section means the assets of the entity do not have their tax cost reset at the formation time. This is because Subdivision 705-A of the Income Tax Assessment Act 1997 , in its application in accordance with Subdivision 705-B of that Act, resets the tax cost of assets of subsidiary members of a group, but not assets of the head company.




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