INCOME TAX ASSESSMENT ACT 1997
Subsection (2) applies if:
(a) an entity (the leaving entity ) ceases to be a *subsidiary member of a *consolidated group at a time (the leaving time ); and
(b) a thing (the accounting liability ) is, in accordance with *accounting standards, or statements of accounting concepts made by the Australian Accounting Standards Board:
(i) a liability of the leaving entity at the leaving time that can or must be recognised in the entity ' s statement of financial position; or
(ii) a liability of the *head company of the group at the leaving time that can or must be recognised in the head company ' s statement of financial position; and
(c) because subsection 701-1(1) (the single entity rule) ceases to apply to the leaving entity at the leaving time:
(i) if subparagraph (b)(i) applies - the accounting liability becomes a liability of the leaving entity, and an asset (the corresponding asset ) that consists of the liability becomes an asset of the head company; or
(ii) if subparagraph (b)(ii) applies - the accounting liability becomes a liability of the head company, and an asset (the corresponding asset ) that consists of the liability becomes an asset of the leaving entity; and
(d) the corresponding asset ' s *tax cost is set at the leaving time under:
(i) if subparagraph (b)(i) applies - section 701-20 ; or
(ii) if subparagraph (b)(ii) applies - section 701-45 ; and
(e) the accounting liability is or is part of a *Division 230 financial arrangement. 715-379(2)
For the purposes of Division 230 of this Act and Schedule 1 to the Tax Laws Amendment (Taxation of Financial Arrangements) Act 2009 :
(a) if subparagraph (1)(b)(i) applies - treat the leaving entity as starting to have the accounting liability at the leaving time for receiving a payment equal to the *tax cost setting amount of the corresponding asset; or
(b) if subparagraph (1)(b)(ii) applies - treat the *head company as starting to have the accounting liability at the leaving time for receiving a payment equal to the tax cost setting amount of the corresponding asset.
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