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INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS    View history reference

History

Part 3-90 inserted by No 68 of 2002, s 3 and Sch 1 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec 700-1 of the Income Tax (Transitional Provisions) Act 1997 ).

Division 701 - Core rules    View history reference

History

Div 701 inserted by No 68 of 2002, s 3 and Sch 1 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec 700-1 of the Income Tax (Transitional Provisions) Act 1997 ).

Supporting provisions  

SECTION 701-55  Setting the tax cost of an asset  

 View history reference

701-55(1)  

This section states the meaning of the expression an asset ' s tax cost is set at a particular time at the asset ' s * tax cost setting amount.

Depreciating asset provisions

701-55(2)  

 View history reference
If any of Subdivisions 40-A to 40-D, sections 40-425 to 40-445 and Subdivisions 328-D and 355-E is to apply in relation to the asset, the expression means that the provisions apply as if:


(a) the asset were * acquired at the particular time for a payment equal to its * tax cost setting amount; and


(b) at that time the same method of working out the decline in value were chosen for the asset as applied to it just before that time; and


(c) where just before that time the prime cost method applied for working out the asset ' s decline in value and the asset ' s tax cost setting amount does not exceed the joining entity ' s * terminating value for the asset - at that time an * effective life were chosen for the asset equal to the remainder of the effective life of the asset just before that time; and


(d) where just before that time the prime cost method applied for working out the asset ' s decline in value and the asset ' s *tax cost setting amount exceeds the joining entity ' s terminating value for the asset - either:

(i) the *head company were required to choose at that time an effective life for the asset in accordance with subsections 40-95(1) and (3) , and any choice of an effective life determined by the Commissioner were limited to one in force at that time; or

(ii) an effective life for the asset were worked out under subsection 40-95(7) , (8) , (9) or (10) at that time; and
 View history reference


(e) where neither paragraph (c) nor (d) applies - at that time an effective life were chosen for the asset equal to the asset ' s effective life just before that time.

History

S 701-55(2) amended by No 110 of 2014, s 3 and Sch 5 item 114, by substituting para (d), effective 16 October 2014. Para (d) formerly read:


(d) where just before that time the prime cost method applied for working out the asset ' s decline in value and the asset ' s * tax cost setting amount exceeds the joining entity ' s terminating value for the asset - the * head company were required to choose at that time an effective life for the asset in accordance with subsections 40-95(1) and (3) and any choice of an effective life determined by the Commissioner were limited to one in force at that time; and

S 701-55(2) amended by No 93 of 2011, s 3 and Sch 3 item 104, by substituting " Subdivisions 328-D and 355-E " for " Subdivision 328-D, and sections 73BA and 73BF of the Income Tax Assessment Act 1936 , " , effective 8 September 2011. For application, savings and transitional provisions see note under Div 355 heading.

S 701-55(2) amended by No 107 of 2003, No 16 of 2003.

Trading stock provisions

701-55(3)  

 View history reference
If Division 70 (other than Subdivision 70-E ) is to apply in relation to the asset, the expression means that the Division applies as if the asset were * trading stock at the start of the income year in which the particular time occurs and its * value at that time were equal to its * tax cost setting amount.

History

S 701-55(3) amended by No 56 of 2010, s 3 and Sch 5 item 2, by inserting " (other than Subdivision 70-E) " after " Division 70 " , applicable on and after 1 July 2002. For transitional provision see note under Subdiv 716-S .

Registered emissions unit provisions

701-55(3A)  

 View history reference
If Division 420 is to apply in relation to the asset, the expression means that the Division applies as if the asset were a *registered emissions unit at the start of the income year in which the particular time occurs, and its *value at that time were equal to the asset ' s *tax cost setting amount.

History

S 701-55(3A) inserted by No 132 of 2011, s 3 and Sch 2 item 39, effective 2 April 2012.

Qualifying security provisions

701-55(4)  

If Division 16E of Part III of the Income Tax Assessment Act 1936 is to apply in relation to the asset, the expression means that the Division applies as if the asset were acquired at the particular time for a payment equal to the asset ' s * tax cost setting amount.

Capital gain and loss provisions

701-55(5)  

 View history reference
If Part 3-1 or 3-3 is to apply in relation to the asset, the expression means that the Part applies as if the asset ' s * cost base or * reduced cost base were increased or reduced so that the cost base or reduced cost base at the particular time equals the asset ' s * tax cost setting amount.

History

S 701-55(5) amended by No 58 of 2006 , s 3 and Sch 7 item 95, by substituting " Part 3-1 or 3-3 " for " Part 3.1 or 3.3 " , effective 22 June 2006.

Division 230 (financial arrangements)

701-55(5A)  

 View history reference
If Division 230 is to apply in relation to the asset, the expression means that the Division applies as if the asset were acquired at the particular time for a payment equal to:


(a) unless paragraph (b) applies - the asset ' s *tax cost setting amount; or


(b) if the asset ' s tax cost is set because an entity becomes a *subsidiary member of a *consolidated group, and Subdivision 230-C (fair value method), Subdivision 230-D (foreign exchange retranslation method) or Subdivision 230-F (reliance on financial reports method) is to apply in relation to the asset - the asset ' s *Division 230 starting value at the particular time.

History

S 701-55(5A) inserted by No 15 of 2009 , s 3 and Sch 1 item 85, effective 26 March 2009. For application and transitional provisions see note under Div 230 heading.

701-55(5B)  

 View history reference
To avoid doubt, for the purposes of paragraph (5A)(b), determine the asset ' s *Division 230 starting value by reference to the relevant standards (as mentioned in section 230-230 , 230-280 or 230-420 ) that apply in relation to the *head company ' s financial report for the income year in which the entity becomes a subsidiary member of the group.

History

S 701-55(5B) inserted by No 15 of 2009 , s 3 and Sch 1 item 85, effective 26 March 2009. For application and transitional provisions see note under Div 230 heading.

WIP amount assets

701-55(5C)  

 View history reference
If:


(a) the asset ' s tax cost is set because an entity becomes a * subsidiary member of a * consolidated group at the particular time; and


(b) the asset is a * WIP amount asset;

the expression means that section 25-95 applies as if the * head company had paid a * work in progress amount for the income year in which the particular time occurs equal to the * tax cost setting amount of the asset.

History

S 701-55(5C) substituted by No 99 of 2012 (as amended by No 142 of 2012), s 3 and Sch 3 item 28, effective 29 June 2012. No 99 of 2012, s 3 and Sch 3 Part 4 contains the following application provisions:

Part 4 - Application

49 Interpretation  
49  In this Part:
2010 Act means the Tax Laws Amendment (2010 Measures No. 1) Act 2010 .interim rules means the amendments made by Parts 1 and 2 of this Schedule.original 2002 law means the Income Tax Assessment Act 1997 (disregarding amendments to that Act made by Division 1 of Part 1 and Division 2 of Part 11 of Schedule 5 to the 2010 Act and by this Schedule).original 2010 law means the Income Tax Assessment Act 1997 (as amended by the 2010 Act, but disregarding amendments made by this Schedule).pre rules means the amendments made by Part 1 of this Schedule.prospective rules means the amendments made by Parts 1, 2 and 3 of this Schedule.
50 Main application rules  
(1) The pre rules, interim rules or prospective rules apply to an assessment of the head company of a consolidated group or MEC group for an income year in respect of an entity (the joining entity ) that becomes a member of the group at a time (the joining time ), in accordance with subitems (2), (3), (4) and (5).
(2) The pre rules apply, for the income year in respect of the joining entity, if:


(a) the joining time is before 12 May 2010; or


(b) the arrangement under which the joining entity joined the group commenced (see item 52) before 10 February 2010.
(3) Despite subitem (2), the interim rules apply, for the income year in respect of the joining entity, if:


(a) both of these conditions are satisfied:


(i) apart from this subitem, the pre rules would apply, for the income year in respect of the joining entity, in accordance with subitem (2);

(ii) the head company ' s latest notice of assessment, for the income year, that relates to the application of the original 2010 law in respect of the joining entity, was served on the head company by the Commissioner on or after 12 May 2010 and on or before 30 March 2011; or


(b) both of these conditions are satisfied:


(i) the joining time is on or after 12 May 2010;

(ii) the arrangement under which the joining entity joined the group commenced (see item 52) on or after 10 February 2010 and on or before 30 March 2011.

(4) The prospective rules apply, for the income year in respect of the joining entity, if:


(a) the joining time is on or after 31 March 2011; and


(b) neither subitem (2) nor (3) applies.
(5) Despite subitems (2) and (3), the original 2002 law applies, for the income year in respect of the joining entity, if the head company ' s latest notice of assessment, for the income year, that relates to the application of subsection 701-55(6) of the original 2002 law in respect of the joining entity, was served on the head company by the Commissioner before 12 May 2010.
(6) Subitem (5) does not apply if:


(a) the head company requests an amendment of the assessment and the amendment relates to the application of subsection 701-55(6) of the original 2002 law in respect of the joining entity; or


(b) the amendment of the assessment, if made:


(i) would relate to an asset of a kind mentioned in paragraph 701-63(3)(b) of the original 2010 law as amended by the pre rules; and

(ii) would not be consistent with the outcome that arises under the pre rules for assets of that kind.
51 Special rule for private rulings etc.  
(1) This item applies to:


(a) a private ruling issued before 31 March 2011; or


(b) a written advice given by the Commissioner before 31 March 2011 under an Annual Compliance Arrangement;

to the extent that the ruling or advice has effect in relation to the application of subsection 701-55(5C) or (6) of the original 2010 law in respect of the joining entity mentioned in item 50.
(2) Item 50 does not affect that effect of the ruling or advice.
(3) However, if the head company requests an amendment of the assessment mentioned in item 50 after the issue of the ruling or the giving of the advice, this item does not apply to the extent that the request is inconsistent with or contrary to the ruling or advice. 52 Commencement of arrangement  
(1) Subitems (2), (3) and (4) specify, for the purpose of this Part, the time of commencement of the arrangement under which the joining entity mentioned in item 50 joined the group.
(2) If the arrangement is or relates to a takeover bid (within the meaning of the Corporations Act 2001 ) the time is when:


(a) for an off-market bid (within the meaning of that Act) - step 4 of the table in subsection 633(1) of that Act is completed; or


(b) for a market bid (within the meaning of that Act) - step 2 of the table in subsection 635(1) of that Act is completed.
(3) If a court orders, under subsection 411(1) of the Corporations Act 2001 :


(a) a meeting or meetings of a company ' s members about the arrangement; or


(b) a meeting or meetings of one or more classes of a company ' s members about the arrangement;

the time is when the application for the order was made.
(4) If subitem (2) or (3) does not apply, the time is when the decision to enter into the arrangement was made. 53 No overpayments interest arises from pre rules  
(1) Disregard a deduction covered by subitem (2) in working out:


(a) the amount (if any) of an excess mentioned in paragraph 8G(1)(d) of the Taxation (Interest on Overpayments and Early Payments) Act 1983 ; and


(b) the amount (if any) of an excess mentioned in paragraph 8G(2)(c) of that Act; and


(c) the extent (if any) to which an amount of relevant tax is overpaid as mentioned in paragraph 9(1)(b) of that Act.
(2) A deduction is covered by this subitem if the pre rules apply in working out the amount of the deduction.
(3) This item does not apply to the extent that its application would affect an amount of interest paid by the Commissioner of Taxation under the Taxation (Interest on Overpayments and Early Payments) Act 1983 before 25 November 2011.

History

S 53 inserted by No 142 of 2012, s 3 and Sch 3 item 1, effective 28 September 2012.

54 No shortfall interest charge or shortfall penalty arises from pre or interim rules  
(1) Disregard a deduction covered by subitem (3) in working out under subsection 280-100(1) in Schedule 1 to the Taxation Administration Act 1953 the extent (if any) to which an entity is liable to pay an additional amount of income tax because of an amended assessment.
(2) Disregard a deduction covered by subitem (3) in working out the amount (if any) of a shortfall amount under subsection 284-80(1) in that Schedule.
(3) A deduction is covered by this subitem if the pre rules or interim rules apply in working out the amount of the deduction.

History

S 54 inserted by No 142 of 2012, s 3 and Sch 3 item 1, effective 28 September 2012.

S 701-55(5C) formerly read:

Rights to future amounts
701-55(5C) If:


(a) the asset ' s tax cost is set because an entity becomes a * subsidiary member of a * consolidated group at the particular time; and


(b) section 716-410 (rights to amounts that are expected to be included in assessable income) covers the asset at the particular time; and


(c) the asset is not a * non-deductible right to future income in relation to the entity;

the expression means that section 716-405 may apply in relation to the asset after the particular time.

S 701-55(5C) substituted by No 99 of 2012, s 3 and Sch 3 item 15, effective 29 June 2012. For application provision see note under this subsection. S 701-55(5C) formerly read:

Rights to future amounts
701-55(5C) If:


(a) the asset ' s tax cost is set because an entity becomes a *subsidiary member of a *consolidated group at the particular time; and


(b) section 716-410 (rights to amounts that are expected to be included in assessable income) covers the asset at the particular time; and


(c) the asset is not a *non-deductible right to future income;

the expression means that section 716-405 may apply in relation to the asset after the particular time.

S 701-55(5C) substituted by No 99 of 2012, s 3 and Sch 3 item 1, effective 29 June 2012. For application provisions see note under this subsection. S 701-55(5C) formerly read:

Rights to future amounts to be included in assessable income of head company
701-55(5C) If section 716-410 (rights to future amounts that are expected to be included in assessable income) covers the asset at the particular time, the expression means that section 716-405 may apply in relation to the asset after the particular time.

S 701-55(5C) and (6) and s 701-56 substituted for s 701-55(6) by No 56 of 2010, s 3 and Sch 5 item 3, applicable on and after 1 July 2002. For transitional provision see note under Subdiv 716-S .

Consumable stores

701-55(5D)  

 View history reference
If:


(a) the asset ' s tax cost is set because an entity becomes a * subsidiary member of a * consolidated group at the particular time; and


(b) the asset is consumable stores;

the expression means that, for the purposes of section 8-1, the * head company of the group is taken to have incurred an outgoing at the particular time in acquiring the asset equal to the asset ' s * tax cost setting amount.

History

S 701-55(5D) inserted by No 99 of 2012, s 3 and Sch 3 item 1, effective 29 June 2012. For application provisions see note under s 701-55(5C) .

Other provisions

701-55(6)  

 View history reference
If any provision of this Act that is not mentioned above is to apply in relation to the asset by including an amount in assessable income, or by allowing an amount as a deduction, in a way that brings into account (directly or indirectly) any of the following amounts:


(a) the cost of the asset;


(b) outgoings incurred, or amounts paid, in respect of the asset;


(c) expenditure in respect of the asset;


(d) an amount of a similar kind in respect of the asset;

the expression means that the provision applies, for the purpose of determining the amount included in assessable income or the amount of the deduction, as if the cost, outgoing, expenditure or other amount had been incurred or paid to acquire the asset at the particular time for an amount equal to its * tax cost setting amount.

Note 2:

For specific clarifications of the operation of this subsection in relation to bad debts, see Subdivision 716-S .

History

S 701-55(6) amended by No 99 of 2012, s 3 and Sch 3 item 29, by repealing note 1, effective 29 June 2012. For application provisions see note under s 701-55(5C) . Note 1 formerly read:

Note 1:

This subsection modifies the application of the provision only for the purpose of determining the amount included in assessable income or the amount of the deduction. Therefore:

(a) the acquisition mentioned in this subsection is recognised only for that purpose; and
(b) apart from the things mentioned in subsection 701-56(1), that acquisition does not affect the operation of section 701-5 (the entry history rule) in relation to the asset for other purposes.

S 701-55(6) substituted by No 99 of 2012, s 3 and Sch 3 item 16, effective 29 June 2012. For application provisions see note under s 701-55(5C) . S 701-55(6) formerly read:

Other provisions
701-55(6) If any provision of this Act that is not mentioned above is to apply in relation to the asset, the expression means that the provision applies as if the asset ' s cost at that time were equal to its * tax cost setting amount.

Note:

For specific clarifications of the operation of this subsection in relation to bad debts, see Subdivision 716-S .

S 701-55(6) substituted by No 99 of 2012, s 3 and Sch 3 item 2, effective 29 June 2012. For application provisions see note under s 701-55(5C) . S 701-55(6) formerly read:

Other provisions
701-55(6) If any provision of this Act that is not mentioned above is to apply in relation to the asset by including an amount in assessable income, or by allowing an amount as a deduction, in a way that brings into account (directly or indirectly) any of the following amounts:


(a) the cost of the asset;


(b) outgoings incurred, or amounts paid, in respect of the asset;


(c) expenditure in respect of the asset;


(d) an amount of a similar kind in respect of the asset;

the expression means that the provision applies, for the purpose of determining the amount included in assessable income or the amount of the deduction, as if the cost, outgoing, expenditure or other amount had been incurred or paid to acquire the asset at the particular time for an amount equal to its tax cost setting amount.

Note 1:

This subsection modifies the application of the provision only for the purpose of determining the amount included in assessable income or the amount of the deduction. Therefore:

(a) the acquisition mentioned in this subsection is recognised only for that purpose; and
(b) apart from the things mentioned in subsection 701-56(1), that acquisition does not affect the operation of section 701-5 (the entry history rule) in relation to the asset for other purposes.
Note 2:

For specific clarifications of the operation of this subsection in relation to bad debts, see Subdivision 716-S.

S 701-55(6) substituted by No 56 of 2010, s 3 and Sch 5 item 3, applicable on and after 1 July 2002. For transitional provision see note under Subdiv 716-S . S 701-55(6) formerly read:

Other provisions
701-55(6) If any provision of this Act that is not mentioned above is to apply in relation to the asset, the expression means that the provision applies as if the asset ' s cost at that time were equal to its * tax cost setting amount.

S 701-55(6) amended by No 90 of 2002.

History

S 701-55 inserted by No 68 of 2002.


 



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