Commonwealth Consolidated Acts

INCOME TAX (TRANSITIONAL PROVISIONS) ACT 1997 - SECT 701C.30

    The following provisions:

  (a)   section   701 - 10 of the Income Tax Assessment Act 1997 (about setting the tax cost of assets that an entity brings into the group);

  (b)   Subdivision   705 - A of that Act, in its application in accordance with Subdivision   705 - B of that Act;

apply, for the purposes of setting the tax cost of an asset of the transitional foreign - held joining entity at the formation time, as if each subsidiary member of the group that is a transitional foreign - held subsidiary at the formation time were a part of the head company of the group, rather than a separate entity.

Note 1:   This section means that references in those provisions to matters internal to the group operate as if transitional foreign - held subsidiaries in the group were parts of the head company of the group. For example:

(a)   provisions operating if the head company holds (whether directly or indirectly) membership interests in another entity operate even if a transitional foreign - held subsidiary actually holds those interests; and

(b)   provisions operating if the head company owns or controls another entity operate even if one or more transitional foreign - held subsidiaries actually own or control that other entity; and

(c)   provisions operating if an entity is interposed between the head company and another entity operate even if the first entity is actually interposed between a transitional foreign - held subsidiary and the other entity.

Note 2:   If the transitional foreign - held joining entity is a transitional foreign - held subsidiary, this section means the assets of the entity do not have their tax cost reset at the formation time. This is because Subdivision   705 - A of the Income Tax Assessment Act 1997 , in its application in accordance with Subdivision   705 - B of that Act, resets the tax cost of assets of subsidiary members of a group, but not assets of the head company.