Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) This section applies if, apart from this Part, an entity could deduct for a single income year the whole of an amount (the original amount ) of capital expenditure by the entity.
(2) If for some but not all of an income year an entity is a * subsidiary member of a * consolidated group or * MEC group, and:
(a) the * head company of the group could have deducted the original amount for that income year if the entity had been a subsidiary member of the group throughout that income year; but
(b) the entity could have deducted the original amount for that income year if throughout that income year the entity had not been a subsidiary member of any consolidated group or MEC group;
the head company can deduct for that income year a proportion of the original amount.
Note 1: Examples of when paragraphs (2)(a) and (b) could be satisfied are set out in note 1 to subsection 716 - 15(2).
Note 2: If the entity is a subsidiary member of the group throughout the income year, the head company can deduct the original amount for the income year, either:
• because the head company is the entity referred to in subsection (1) of this section; or
• because of section 701 - 1 (Single entity rule); or
• because of section 701 - 5 (Entry history rule).
(3) The proportion is worked out by multiplying the original amount by:
• the number of days that are in the * spreading period, and on which the entity was a * subsidiary member of the group;
divided by:
• the number of days that are in the spreading period.
Entity's deduction for a non - membership period
(4) If:
(a) for some but not all of an income year, an entity is a * subsidiary member of a * consolidated group or * MEC group; and
(b) the entity could have deducted the original amount for that income year if throughout that income year the entity had not been a subsidiary member of any consolidated group or MEC group;
the entity can deduct a proportion of the original amount for a part of the income year that is a non - membership period for the purposes of section 701 - 30.
Note 1: Section 701 - 30 is about working out an entity's tax position for a period when it is not a subsidiary member of any consolidated group.
Note 2: If throughout the income year the entity is not a subsidiary member of any consolidated group or MEC group, this section does not affect the entity's ability to deduct the original amount for the income year either:
• because the entity is the entity referred to in subsection (1); or
• because of section 701 - 40 (Exit history rule).
(5) The proportion is worked out by multiplying the original amount by:
• the number of days that are in both the non - membership period and the * spreading period;
divided by:
• the number of days that are in the spreading period.
(6) The spreading period for the original amount:
(a) starts when, apart from this Part, an entity would become entitled to deduct the amount for an income year; and
(b) ends at the end of the income year.