INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 719 - MEC groups  

Subdivision 719-C - MEC group cost setting rules: joining cases  

Modified application of tax cost setting rules for joining

SECTION 719-160   Tax cost setting rules for joining have effect with modifications  

719-160(1A)  


This section applies if an entity (the MEC joining entity ) becomes a * subsidiary member of a * MEC group at a time (the MEC joining time ).

719-160(1)  
This section has effect for the head company core purposes set out in subsection 701-1(2) . General modifying rule

719-160(2)  
The provisions mentioned in subsection (3) operate, for the purposes of setting the * tax cost of an asset of the MEC joining entity, as if each * subsidiary member of the group (including the MEC joining entity) that is an * eligible tier-1 company at the MEC joining time were a part of the * head company of the group, rather than a separate entity.

Note 1:

This subsection means that references in those provisions to matters internal to the group operate as if eligible tier-1 companies 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 an eligible tier-1 company actually holds those interests; and
  • (b) provisions operating if the head company owns or controls another entity operate even if one or more eligible tier-1 companies 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 an eligible tier-1 company and the other entity.
  • Note 2:

    If the MEC joining entity is an eligible tier-1 company, this subsection means the assets of the entity do not have their tax cost reset at the MEC joining time. This is because Subdivision 705-A (and related provisions) reset the tax cost of assets of subsidiary members of a group, but not assets of the head company.

    719-160(3)  
    The provisions are:


    (a) section 701-10 (about setting the tax cost of assets of an entity joining a group); and


    (b) Subdivision 705-A ; and


    (c) any other provision of this Act giving Subdivision 705-A a modified effect in circumstances other than those covered by that Subdivision.

    Note:

    An example of provisions covered by paragraph (c) are the provisions of Subdivision 705-B giving Subdivision 705-A a modified effect when a consolidated group is formed.


     

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