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-A 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 ).

S 705-125(1) amended by No 56 of 2010, s 3 and Sch 5 item 19, by substituting all the words from and including " That mechanism involves " , effective 3 June 2010. No 56 of 2010, s 3 and Sch 5 item 35 contains the following application provision:

Application provision  
(1)
The amendments made by this Part apply in relation to an entity that becomes a subsidiary member of a consolidated group or MEC group on or after:

(a) if the head company of the group makes a choice in accordance with subitems (2) and (3) - 1 July 2002; or

(b) otherwise - the day on which the Bill that became this Act was introduced into the House of Representatives.

(2)
A choice mentioned in paragraph (1)(a) must be made:

(a) on or before 30 June 2011; or

(b) within a further time allowed by the Commissioner.

(3)
A choice mentioned in paragraph (1)(a) must be made in writing.

The words formerly read:

That mechanism involves working out a factor by which the pre-CGT status can be attached to the joining entity ' s assets and then recognised in membership interests held in an entity that owns the assets on ceasing to be a ^* subsidiary member of the joined group.

S 705-125(2) substituted by No 56 of 2010, s 3 and Sch 5 item 20, effective 3 June 2010. For application provision, see note under section 705-125(1) . S 705-125(2) formerly read:

Pre-CGT factor to be worked out for certain assets

705-125(2)
A pre-CGT factor is worked out under this section for each asset of the joining entity at the joining time, other than one that, in accordance with ^* accounting standards, is a current asset.

Note:

A pre-CGT factor is not worked out for current assets because they would, in the ordinary course of operations of the joining entity, be consumed or disposed of within 12 months.

S 705-125(3) repealed by No 56 of 2010, s 3 and Sch 5 item 20, effective 3 June 2010. For application provision, see note under section 705-125(1) . S 705-125(3) formerly read:

How to work out pre-CGT factor

705-125(3)
The pre-CGT factor is the amount (not exceeding 1) worked out by dividing:

(a) the sum of:

(i) for each ^* membership interest in the joining entity held by the ^* head company that is a ^* pre-CGT asset of the head company - the interest ' s ^* market value at the joining time; and

(ii) for each membership interest in the joining entity held by a ^* subsidiary member that has a pre-CGT factor - the interest ' s market value at the joining time multiplied by its pre-CGT factor;

by:

(b) the sum of the market values, at the joining time, of all the joining entity ' s assets for which a pre-CGT factor is to be worked out.

Note:

The treatment of membership interests in an entity ceasing to be a member of the joined group as pre-CGT assets of members of the group could be manipulated to produce too many pre-CGT assets if the pre-CGT factor of an asset were not limited to 1 by the above subsection.

S 705-125(4) amended by No 56 of 2010, s 3 and Sch 5 item 21, by substituting " subsection (2) " for " paragraph (3)(a) " , effective 3 June 2010. For application provision, see note under section 705-125(1) .

S 705-125(4) inserted by No 117 of 2002, s 3 and Sch 5 item 1, 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 705-125 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 ).