Income Tax (Transitional Provisions) Act 1997
(a) an entity becomes a subsidiary member of a consolidated group; and
(b) because subsection 701-1(1) (the single entity rule) of the Income Tax Assessment Act 1997 applies, an asset of the entity becomes an asset of the head company of the group; and
(c) a balancing adjustment event happens in relation to the asset while it is an asset of the head company;
subsection 40-285(6) of this Act (about reducing the amount included in assessable income for a balancing adjustment event) applies as if the cost of the asset were equal to the tax cost setting amount applicable in relation to the asset for the purposes of having its tax cost set by section 701-10 (cost to head company of assets that entity brings into group) of the Income Tax Assessment Act 1997 .
The tax cost setting amount applicable in relation to the asset for that purpose is worked out in accordance with Division 705 of the Income Tax Assessment Act 1997.
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