Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 715 - Interactions between this Part and other areas of the income tax law  

Subdivision 715-A - Treatment of unrealised losses existing when ownership or control of a company changes before or during consolidation  

165-CC tagged assets that form loss denial pools of head company when consolidated group is formed

SECTION 715-70   Assets of subsidiary member that become those of head company  

715-70(1)  
At the time (the formation time ) when an entity becomes a * subsidiary member of a * consolidated group, a loss denial pool of the * head company of the group is created if:


(a) the formation time is not a * changeover time for the head company; and


(b) the entity is a chosen transitional entity under Division 701 of the Income Tax (Transitional Provisions) Act 1997 ; and


(c) subsection (2) or (4) of this section is satisfied.

Note 1:

If the entity is a chosen transitional entity, section 701-15 of the Income Tax (Transitional Provisions) Act 1997 prevents:

  • section 701-10 (cost to head company of assets of joining entity); and
  • subsection 701-35(4) (setting value of trading stock at tax-neutral amount);
  • of this Act from applying to the entity ' s assets in relation to the formation time.

    Note 2:

    The pool is distinct from any other loss denial pool of the head company, for example, one created under this section because another entity becomes a subsidiary member of the group at the formation time.

    Joining entity has 165-CC tagged assets

    715-70(2)  
    This subsection is satisfied if:


    (a) a * CGT asset of the entity, or each of 2 or more CGT assets of the entity:


    (i) is a * 165-CC tagged asset of the entity at the formation time; and

    (ii) was owned by the entity at the * changeover time; and

    (iii) is not a * membership interest in a * member of the group; and

    (iv) is not a right or option (including a contingent right or option), created or issued by a member of the group, to acquire such a membership interest; and

    (v) is not constituted by a liability owed to the entity by a member of the group at the formation time; and


    (b) the entity ' s * final RUNL just before the formation time (as reduced by any reductions under section 715-50 or 715-55 ) was greater than nil; and


    (c) the entity does not satisfy the *business continuity test for:


    (i) the period (the business continuity test period ) consisting of the entity ' s * trial year; and

    (ii) the time (the test time ) just before the * changeover time.
    Note:

    Paragraph (2)(b) has the effect that if the entity has 165-CC tagged assets that are affected by section 715-50 or 715-55 (because they are membership interests in, or accounting liabilities owed by, another group member), those sections are applied before this section.

    715-70(3)  
    When it is created because of subsection (2), the pool consists of the one or more * CGT assets referred to in paragraph (2)(a), and its loss denial balance is equal to the * final RUNL referred to in paragraph (2)(b).

    Note:

    170-D deferred losses on 165-CC tagged assets of the head company may be added to the pool by subsection 715-355(2) .

    Entity has loss denial pool

    715-70(4)  
    This subsection is satisfied if, just before the formation time, the entity had a * loss denial pool.

    715-70(5)  
    When it is created because of subsection (4), the * head company ' s loss denial pool:


    (a) consists of the one or more * CGT assets of which the entity ' s * loss denial pool consisted; and


    (b) has a loss denial balance equal to the * loss denial balance of the entity ' s loss denial pool;

    just before the formation time.


     

    Disclaimer and notice of copyright applicable to materials provided by CCH Australia Limited

    CCH Australia Limited ("CCH") believes that all information which it has provided in this site is accurate and reliable, but gives no warranty of accuracy or reliability of such information to the reader or any third party. The information provided by CCH is not legal or professional advice. To the extent permitted by law, no responsibility for damages or loss arising in any way out of or in connection with or incidental to any errors or omissions in any information provided is accepted by CCH or by persons involved in the preparation and provision of the information, whether arising from negligence or otherwise, from the use of or results obtained from information supplied by CCH.

    The information provided by CCH includes history notes and other value-added features which are subject to CCH copyright. No CCH material may be copied, reproduced, republished, uploaded, posted, transmitted, or distributed in any way, except that you may download one copy for your personal use only, provided you keep intact all copyright and other proprietary notices. In particular, the reproduction of any part of the information for sale or incorporation in any product intended for sale is prohibited without CCH's prior consent.