Income Tax Assessment Act 1997
Work out the old group ' s allocable cost amount for the leaving entity in this way:
|Working out the old group ' s allocable cost amount for the leaving entity|
|Step||What the step requires||Purpose of the step|
|1||Start with the step 1 amount worked out under section 711-25, which is about the *terminating values of the leaving entity ' s assets just before the leaving time.||To ensure that the allocable cost amount includes the cost of the assets.|
|2||Add to the result of step 1 the step 2 amount worked out under section 711-35, which is about the value of deductions inherited by the leaving entity that are not reflected in the *terminating value of the leaving entity ' s assets just before the leaving time.||To ensure that the value of the deductions is reflected in the allocable cost amount.|
|3||Add to the result of step 2 the step 3 amount worked out under section 711-40, which is about liabilities owed by *members of the old group to the leaving entity at the leaving time.||To ensure that the liabilities, which are not recognised while the leaving entity is taken to be part of the *head company by subsection 701-1(1), are reflected in the allocable cost amount.|
|4||Subtract from the result of step 3 the step 4 amount worked out under section 711-45, which is about:
(a) the leaving entity ' s liabilities just before the leaving time; and
(b) *membership interests in the leaving entity that are not held by *members of the old group.
|To ensure that the allocable cost amount is reduced to reflect the liabilities and the value of the membership interests.|
|5||If the amount remaining after step 4 is positive, it is the old group ' s allocable cost amount for the leaving entity. Otherwise the old group ' s allocable cost amount is nil.|
|6||(Repealed by No 90 of 2002)|
If the amount remaining after step 4 is negative, the head company is taken to have made a capital gain equal to the amount: see CGT event L5.
If it is necessary to work out whether the * head company makes a capital loss for a * CGT event that happens at or after the leaving time in relation to any of the * membership interests, the old group ' s allocable cost amount for the leaving entity is instead worked out as if the head company ' s * terminating value for any asset covered by subsection 705-30(4) (as it applies for the purposes of section 711-30 ) were instead equal to the asset ' s * reduced cost base just before the leaving time.
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