Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 715.225

  (1)   For the purposes of:

  (a)   using the * individual asset method to work out whether the * head company of a * consolidated group has an adjusted unrealised loss under section   165 - 115U at an * alteration time; or

  (b)   working out under section   165 - 115W whether the head company of a consolidated group has a trading stock decrease at an alteration time;

step 1 of the method statement in subsection   165 - 115U(1), or step 2 of the method statement in subsection   165 - 115W(1), does not apply to an amount that was counted in respect of a * CGT asset at an earlier time if:

  (c)   at the time (the joining time ) when an entity became a * subsidiary member of the group, the asset became an asset of the head company because of subsection   701 - 1(1) (Single entity rule); and

  (d)   the earlier time is an * alteration time that happened in respect of the entity before the joining time;

unless the entity is a chosen transitional entity under Division   701 of the Income Tax (Transitional Provisions) Act 1997 .

Note:   If the joining entity is a chosen transitional entity, section   701 - 15 of the Income Tax (Transitional Provisions) Act 1997 prevents:

•   section   701 - 10 (cost to head company of assets of joining entity); and

•   subsection   701 - 35(4) (setting value of trading stock at tax - neutral amount);

  of this Act from applying to the assets of the joining entity in relation to the joining time.

  If the joining entity is not a chosen transitional entity, it is assumed that the process of resetting the tax costs of its assets will bring their tax costs into closer alignment to their market values, and so remove the need to consider unrealised losses on those assets that existed before the joining time.

  (2)   This section has effect despite section   701 - 5 (Entry history rule).