INCOME TAX ASSESSMENT ACT 1997 - SECT 705.25 Tax cost setting amount for retained cost base assets
INCOME TAX ASSESSMENT ACT 1997 - SECT 705.25
Tax cost setting amount for retained cost base assets(1) This section states what the * tax cost setting amount is for a * retained cost base asset.
(2) If the * retained cost base asset is covered by paragraph (a), (b) or (ba) of the definition of that expression and is not covered by another subsection of this section, its * tax cost setting amount is equal to the amount of the Australian currency concerned.
(3) If the * retained cost base asset is a qualifying security (within the meaning of Division 16E of Part III of the Income Tax Assessment Act 1936 ), the * tax cost setting amount for the qualifying security is instead equal to the joining entity's * terminating value for the asset.
Entitlements to pre - paid services etc.
(4) If the * retained cost base asset is covered by paragraph (c) of the definition of that expression, its * tax cost setting amount is equal to the amount of the deductions to which the * head company is entitled under section 701 - 5 (the entry history rule) in respect of the expenditure that gave rise to the entitlement.
Note: If the total amount to be treated as tax cost setting amounts for retained cost base assets exceeds the joined group's allocable cost amount for the joining entity, the head company makes a capital gain equal to the excess: see CGT event L3.
Financial arrangements to which Subdivision 250 - E applies
(4A) The * tax cost setting amount is instead equal to the joining entity's * terminating value for the * retained cost base asset if the asset is a * financial arrangement to which Subdivision 250 - E applies immediately before the joining time.
Rights to payments in respect of uncompleted work etc.
(4B) If the * retained cost base asset is covered by paragraph (d) or (e) of the definition of that expression, its * tax cost setting amount is equal to the joining entity's * terminating value for the asset.
(5) A retained cost base asset is:
(a) Australian currency, other than * trading stock or * collectables of the joining entity; or
(b) a right to receive a specified amount of such Australian currency, other than a right that is a marketable security within the meaning of section 70B of the Income Tax Assessment Act 1936 ; or
Example: A debt or a bank deposit.
(ba) a unit in a * cash management trust, if:
(i) the redemption value of the unit is expressed in Australian dollars; and
(ii) the redemption value of the unit cannot increase; or
(c) a right to have something done under an * arrangement under which:
(i) expenditure has been incurred in return for the doing of the thing; and
(ii) the thing is required or permitted to be done, or to cease being done, after the expenditure is incurred; or
(d) a * right to future income (other than a * WIP amount asset); or
(e) a * depreciating asset that the joining entity * holds as a result of a * balancing adjustment event mentioned in paragraph 417 - 30(2)(b).
Note 1: There are some additional retained cost base assets for a joining entity that is a life insurance company: see Subdivision 713 - L. The tax cost setting amount for those assets is worked out under that Subdivision.
Note 2: The joining entity's right to receive lease payments under
a lease is treated as a retained cost base asset in some circumstances (see
paragraph 705 - 56(3)(b)).