INCOME TAX ASSESSMENT ACT 1997 - SECT 701.10 Cost to head company of assets of joining entity

INCOME TAX ASSESSMENT ACT 1997 - SECT 701.10

  (1)   This section has effect for the head company core purposes when the entity becomes a * subsidiary member of the group.

Assets to which section applies

  (2)   This section applies in relation to each asset that would be an asset of the entity at the time it becomes a * subsidiary member of the group, assuming that subsection   701 - 1(1) (the single entity rule) did not apply.

Note:   See subsection   705 - 35(3) for the treatment of a goodwill asset resulting from the head company's ownership and control of the joining entity.

Object

  (3)   The object of this section (and Division   705 which relates to it) is to recognise the cost to the * head company of such assets as an amount reflecting the group's cost of acquiring the entity.

Setting tax cost of assets

  (4)   Each asset's * tax cost is set at the time the entity becomes a * subsidiary member of the group at the asset's * tax cost setting amount.

Multiple setting of tax cost for same trading stock or registered emissions unit

  (5)   However, if:

  (a)   the asset is * trading stock or a * registered emissions unit; and

  (b)   the asset's * tax cost is set by this section at more than one time (each of which is a setting time ) for the same income year;

then, except where subsection   (6) applies, only the amount at which the tax cost is set at the last of the setting times is to be taken into account.

  (6)   If:

  (a)   the * head company's * terminating value for the asset; or

  (b)   the * value of the asset at the start of the income year;

is required to be worked out for one or more occasions when an entity (whether or not the same entity) ceases to be a * subsidiary member of the group in the income year, then the amount at which the asset's * tax cost is set by this section at a particular setting time is only taken into account in working out the head company's terminating value for a particular occasion if:

  (c)   the setting time occurs before the occasion; and

  (d)   there is no intervening setting time or occasion.