TD 2004/65A1 - Addendum
Income tax: consolidation: capital gains: does section 104-530 (CGT event L7) of the Income Tax Assessment Act 1997 apply where:
- an entity becomes a member of a consolidated group;
- the entity owes a liability to another member of the group at that time; and
- the liability is later discharged?
This Addendum amends Taxation Determination TD 2004/65 to take into account the changes introduced by Schedule 5 to the Tax Laws Amendment (2010 Measures No. 1) Act 2010.
TD 2004/65 is amended as follows:
1. Paragraph 2
Omit the paragraph; substitute:
2. Under CGT event L7, if the amount of a liability taken into account in working out the allocable cost amount (ACA) for an entity that becomes a member of a consolidated group is later discharged for a different amount (the realised amount), the head company may make a capital loss. A capital loss will arise if the liability is discharged by the head company on or after 1 July 2002 and before 10 February 2010 and the ACA would have been greater had the realised amount been taken into account in working out the ACA.
2. Paragraph 5
Omit 'years commencing both before and after its date of issue'; substitute 'a capital loss under CGT event L7 that arises on or after 1 July 2002 and before 10 February 2010.'.
This Addendum applies on and after 1 July 2002, the date of application of the amendments to the Income Tax Assessment Act 1997 made by Part 12 of Schedule 5 to Tax Laws Amendment (2010 Measures No. 1) Act 2010. The effect of the amendments is that TD 2004/65 will only apply where a capital loss arises under CGT event L7 before 10 February 2010.
Commissioner of Taxation
22 June 2011