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INCOME TAX ASSESSMENT ACT 1997 - SECT 705.75 Liabilities of the joining entity--reductions for purposes of step 2 in working out allocable cost amount

INCOME TAX ASSESSMENT ACT 1997 - SECT 705.75

Liabilities of the joining entity--reductions for purposes of step 2 in working out allocable cost amount

Reduction for future deduction

  (1A)   Subsection   (1) applies to an accounting liability to the extent that it is a liability of a kind described in:

  (a)   paragraph   705 - 70(1AC)(c); or

  (b)   paragraph   705 - 70(1AC)(d).

  (1)   If some or all of an accounting liability will result in a deduction to the * head company, the amount to be added for the accounting liability under subsection   705 - 70(1) is reduced by the following amount:

Start formula open bracket Deduction times *Corporate tax rate close bracket minus Double-counting adjustment end formula

where:

"double-counting adjustment" means the amount of any reduction that has already occurred in the accounting liability under subsection   705 - 70(1) to take account of the future availability of the deduction.

Reduction for intra - group liabilities

  (2)   If the amount of an accounting liability of the joining entity that is owed to a * member of the joined group is more than the amount applicable under the following table, the amount to be added for the accounting liability under subsection   705 - 70(1) instead equals the amount applicable under the table.

 

Amount applicable

Item

If the market value of the member's asset constituted by the accounting liability is...

The amount applicable is...

1

equal to or greater than the asset's * cost base

the asset's cost base

2

less than the asset's * cost base but greater than its * reduced cost base

the asset's * market value

3

less than or equal to the asset's * reduced cost base

the asset's reduced cost base

Application of subsections   705 - 65(2), (3), (3AA) and (3A)

  (3)   Subsections   705 - 65(2), (3), (3AA) and (3A) apply in relation to references in subsection   (2) of this section to an asset's * cost base or * reduced cost base in a corresponding way to that in which they apply in relation to references in the table in subsection   705 - 65(1) to a * membership interest's cost base or reduced cost base.

Application of subsection   705 - 65(4)

  (4)   Subsection   705 - 65(4) applies in relation to assets mentioned in subsection   (2) of this section in a corresponding way to that in which it applies in relation to members' * membership interests.

Reduction in reduced cost base under subsection   165 - 115ZA(3) to be added back

  (5)   If:

  (a)   in working out the * reduced cost base of a * member's asset for the purposes of subsection   (2), a reduction has taken place under subsection   165 - 115ZA(3) (about alterations in ownership or control of loss companies); and

  (b)   the reduction is to some extent attributable to so much of an amount that was taken into account both in working out the amount of the reduction and in working out:

  (i)   the step 5 amount under section   705 - 100; or

  (ii)   the step 6 amount under section   705 - 110;

the reduced cost base is, to the extent mentioned in paragraph   (b), increased by:

  (c)   if subparagraph   (b)(i) applies--the amount of that reduction; or

  (d)   if subparagraph   (b)(ii) applies--the amount of that reduction multiplied by the * corporate tax rate.

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