Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 713.205

  (1)   The first object of this Subdivision is to ensure that if:

  (a)   an entity that is a partner in a partnership becomes a * subsidiary member of a * consolidated group; and

  (b)   the partnership does not become a * subsidiary member of the group;

the provisions mentioned in subsection   (3) operate as if the * partnership cost setting interests of the entity in the partnership were the entity's only assets relating to the partnership.

Note:   In general, the head company of the consolidated group is treated as a partner in the partnership, in accordance with section   701 - 1 (the single entity rule).

  (2)   The second object of this Subdivision is to ensure that where a partnership becomes a * subsidiary member of a * consolidated group, the provisions mentioned in subsection   (3) operate:

  (a)   as if the group became the holder of the assets of the partnership; and

  (b)   to set the * tax cost of the assets of the partnership at an appropriate amount, taking into account the taxation treatment of partnerships.

Note:   While the partnership is a subsidiary member of the group, it loses its separate tax identity (under the single entity rule in subsection   701 - 1(1)). Therefore, in general, the assets of the partnership are treated as assets of the head company of the group and partnership cost setting interests in the partnership are ignored.

  (3)   The provisions are:

  (a)   section   701 - 10 (about setting the tax cost of assets of an entity joining a group); and

  (b)   Subdivision   705 - A; and

  (c)   any other provision of this Act giving Subdivision   705 - A a modified effect in circumstances other than those covered by that Subdivision.

Note:   An example of provisions covered by paragraph   (c) are the provisions of Subdivision   705 - B giving Subdivision   705 - A a modified effect when a consolidated group is formed.

  (4)   The third object of this Subdivision is to ensure that, where a partnership ceases to be a * subsidiary member of a * consolidated group, the provisions mentioned in subsection   (5) operate:

  (a)   as if the group's * partnership cost setting interests were the group's only assets relating to the partnership; and

  (b)   to set the * tax cost of those interests at an appropriate amount, taking into account the fact that the group ceases to be the holder of the assets of the partnership.

  (5)   The provisions are:

  (a)   sections   701 - 15 and 701 - 50 (about setting the tax cost of membership interests in an entity that leaves the group); and

  (b)   sections   701 - 20 and 701 - 45 (about the cost of assets consisting of certain liabilities owed by or to an entity that leaves the group); and

  (c)   Division   711.