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INCOME TAX ASSESSMENT ACT 1997 - SECT 719.170 Modified effect of subsections 705 - 175(1) and 705 - 185(1)

INCOME TAX ASSESSMENT ACT 1997 - SECT 719.170

Modified effect of subsections 705 - 175(1) and 705 - 185(1)

  (1)   This section applies if all of the * members of a * MEC group (the acquired group ) become members of another MEC group, or of a * consolidated group, at a particular time (the acquisition time ) as a result of the * acquisition of * membership interests in:

  (a)   the * head company of the acquired group; and

  (b)   other entities that were * eligible tier - 1 companies of the acquired group just before the acquisition time.

  (2)   Subsections   705 - 175(1) and 705 - 185(1) have effect as if a * membership interest in an entity mentioned in paragraph   (1)(b) of this section were a membership interest in the * head company of the acquired group.

Note 1:   If the acquiring group is a MEC group, and the head company of the acquired group becomes an eligible tier - 1 company of the acquiring group, the assets of the members of the acquired group do not have their tax cost reset at the acquisition time. This is because:

(a)   section   719 - 160 treats an entity becoming an eligible tier - 1 company of the acquiring group as if it were a part of the head company of that group; and

(b)   section   705 - 185 treats the subsidiary members of the acquired group as part of the head company of the acquired group.

Note 2:   If:

(a)   the acquiring group is a MEC group, but the head company of the acquired group does not become an eligible tier - 1 company of the acquiring group; or

(b)   the acquiring group is a consolidated group and the acquired group is a MEC group;

  the assets of the members of the acquired group have their tax cost reset at the acquisition time (section   719 - 160 does not preclude tax cost resetting in these cases). For the purposes of resetting the tax cost of those assets, section   705 - 185 treats the subsidiary members of the acquired group as part of the head company of the acquired group.

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