Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) An amount that you are entitled to receive because you ceased to * hold a * registered emissions unit is not to be:
(a) included in your assessable income; or
(b) taken into account in working out your assessable income; or
(c) taken into account in working out an amount you can deduct;
under any provision of this Act outside this Division.
(2) Subsection (1) does not affect the operation of Division 6 so far as that Division provides for the significance of residence or source for the assessability of ordinary and statutory income.
Note: An amount included in your assessable income under this Division may be ordinary or statutory income for the purposes of Division 6.
(3) Subsections (1) and (4) do not affect the application of:
(a) Division 392 (long - term averaging of primary producers' tax liability); or
(b) Division 393 (farm management deposits);
to an amount that you are entitled to receive because you ceased to * hold a * primary producer registered emissions unit.
Australian carbon credit units
(4) An amount is not to be included in your assessable income under any provision of this Act outside this Division because an * Australian carbon credit unit was issued to you in accordance with the Carbon Credits (Carbon Farming Initiative) Act 2011 .
Note 1: A capital gain or capital loss you make from a registered emissions unit is disregarded (subsection 118 - 15(1)).
Note 2: A capital gain or capital loss you make from a right to receive an Australian carbon credit unit is disregarded (subsection 118 - 15(3)).
Income Tax Assessment Act 1997
No. 38, 1997
Compilation No. 254
Compilation date: 14 October 2024
Includes amendments: Act No. 38, 2024
This compilation is in 12 volumes
Volume 1: sections 1 - 1 to 36 12 pt">- 55
Volume 2: sections 40 - 1 to 67 - 30
Volume 3: sections 70 - 1 to 121 12 pt">- 35
Volume 4: sections 122 - 1 to 197 12 pt">- 85
Volume 5: sections 200 - 1 to 253 - 15
Volume 6: sections 275 - 1 to 313 12 pt">- 85
Volume 7: sections 315 - 1 to 420 - 70
Volume 8: sections 615 - 1 to 721 - 40
Volume 9: sections 723 - 1 to 880 12p t">- 205
Volume 10: sections 900 - 1 to 995 - 1
Volume 11: Endnotes 1 to 3
Volume 12: Endnote 4
Each volume has its own contents
About this compilation
This compilation
This is a compilation of the Income Tax Assessment Act 1997 that shows the text of the law as amended and in force on 14 October 2024 (the compilation date ).
The notes at the end of this compilation (the endnotes ) include information about amending laws and the amendment history of provisions of the compiled law.
Uncommenced amendments
The effect of uncommenced amendments is not shown in the text of the compiled law. Any uncommenced amendments affecting the law are accessible on the Register (www.legislation.gov.au). The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. For more information on any uncommenced amendments, see the Register for the compiled law.
Application, saving and transitional provisions for provisions and amendments
If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes.
Editorial changes
For more information about any editorial changes made in this compilation, see the endnotes.
Modifications
If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. For more information on any modifications, see the Register for the compiled law.
Self - repealing provisions
If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes.
Contents
Chapter 3--Specialist liability rules
Part 3 - 80--Roll - overs applying to assets generally
Division 615--Roll - overs for business restructures
Guide to Division 615
615 - 1 What this Division is about
Subdivision 615 - A--Choosing to obtain roll - overs
615 - 5 Disposing of interests in one entity for shares in a company
615 - 10 Redeeming or cancelling interests in one entity for shares in a company
Subdivision 615 - B--Further requirements for choosing to obtain roll - overs
615 - 15 Interposed company must own all the original interests
615 - 20 Requirements relating to your interests in the original entity
615 - 25 Requirements relating to the interposed company
615 - 30 Interposed company must make a particular choice
615 - 35 ADI restructures--disregard certain preference shares
Subdivision 615 - C--Consequences of roll - overs
615 - 40 CGT consequences
615 - 45 Additional consequences--deferral of profit or loss
615 - 50 Trading stock
615 - 55 Revenue assets
615 - 60 Disregard CGT exemption for trading stock
Subdivision 615 - D--Consequences for the interposed company
615 - 65 Consequences for the interposed company
Division 620--Assets of wound - up corporation passing to corporation with not significantly different ownership
Subdivision 620 - A--Corporations covered by Subdivision 124 - I
Guide to Subdivision 620 - A
620 - 5 What this Subdivision is about
Application and object of this Subdivision
620 - 10 Application
620 - 15 Object
CGT consequences
620 - 20 Disregard body's capital gains and losses from CGT assets
620 - 25 Cost base and pre - CGT status of CGT asset for company
Consequences for depreciating assets
620 - 30 Roll - over relief for balancing adjustment events
Consequences for trading stock
620 - 40 Body taken to have sold trading stock to company
Consequences for revenue assets
620 - 50 Body taken to have sold revenue assets to company
Part 3 - 90--Consolidated groups
Division 700--Guide and objects
700 - 1 What this Part is about
Objects
700 - 10 Objects of this Part
Division 701--Core rules
Common rule
701 - 1 Single entity rule
Head company rules
701 - 5 Entry history rule
701 - 10 Cost to head company of assets of joining entity
701 - 15 Cost to head company of membership interests in entity that leaves group
701 - 20 Cost to head company of assets consisting of certain liabilities owed by entity that leaves group
701 - 25 Tax - neutral consequence for head company of ceasing to hold assets when entity leaves group
Entity rules
701 - 30 Where entity not subsidiary member for whole of income year
701 - 35 Tax - neutral consequence for entity of ceasing to hold assets when it joins group
701 - 40 Exit history rule
701 - 45 Cost of assets consisting of liabilities owed to entity by members of the group
701 - 50 Cost of certain membership interests of which entity becomes holder on leaving group
Supporting provisions
701 - 55 Setting the tax cost of an asset
701 - 56 Application of subsection 701 - 55(6)
701 - 58 Effect of setting the tax cost of an asset that the head company does not hold under the single entity rule
701 - 60 Tax cost setting amount
701 - 60A Tax cost setting amount for asset emerging when entity leaves group
701 - 61 Assets in relation to Division 230 financial arrangement--head company's assessable income or deduction
701 - 63 Right to future income and WIP amount asset
701 - 65 Net income and losses for trusts and partnerships
701 - 67 Assets in this Part are CGT assets, etc.
Exceptions
701 - 70 Adjustments to taxable income where identities of parties to arrangement merge on joining group
701 - 75 Adjustments to taxable income where identities of parties to arrangement re - emerge on leaving group
701 - 80 Accelerated depreciation
701 - 85 Other exceptions etc. to the rules
Division 703--Consolidated groups and their members
Guide to Division 703
703 - 1 What this Division is about
Basic concepts
703 - 5 What is a consolidated group ?
703 - 10 What is a consolidatable group ?
703 - 15 Members of a consolidated group or consolidatable group
703 - 20 Certain entities that cannot be members of a consolidated group or consolidatable group
703 - 25 Australian residence requirements for trusts
703 - 30 When is one entity a wholly - owned subsidiary of another?
703 - 33 Transfer time for sale of shares in company
703 - 35 Treating entities as wholly - owned subsidiaries by disregarding employee shares
703 - 37 Disregarding certain preference shares following an ADI restructure
703 - 40 Treating entities held through non - fixed trusts as wholly - owned subsidiaries
703 - 45 Subsidiary members or nominees interposed between the head company and a subsidiary member of a consolidated group or a consolidatable group
Choice to consolidate a consolidatable group
703 - 50 Choice to consolidate a consolidatable group
Consolidated group created when MEC group ceases to exist
703 - 55 Creating consolidated groups from certain MEC groups
Notice of events affecting consolidated group
703 - 58 Notice of choice to consolidate
703 - 60 Notice of events affecting consolidated group
Effects of choice to continue group after shelf company becomes new head company
703 - 65 Application
703 - 70 Consolidated group continues in existence with interposed company as head company and original entity as a subsidiary member
703 - 75 Interposed company treated as substituted for original entity at all times before the completion time
703 - 80 Effects on the original entity's tax position
Division 705--Tax cost setting amount for assets where entities become subsidiary members of consolidated groups
Guide to Division 705
705 - 1 What this Division is about
Subdivision 705 - A--Basic case: a single entity joining an existing consolidated group
Guide to Subdivision 705 - A
705 - 5 What this Subdivision is about
Application and object
705 - 10 Application and object of this Subdivision
705 - 15 Cases where this Subdivision does not have effect
Tax cost setting amount for assets that joining entity brings into joined group
705 - 20 Tax cost setting amount worked out under this Subdivision
705 - 25 Tax cost setting amount for retained cost base assets
705 - 27 Reduction in tax cost setting amount that exceeds market value of certain retained cost base assets
705 - 30 What is the joining entity's terminating value for an asset?
705 - 35 Tax cost setting amount for reset cost base assets
705 - 40 Tax cost setting amount for reset cost base assets held on revenue account etc.
705 - 45 Reduction in tax cost setting amount for accelerated depreciation assets
705 - 47 Reduction in tax cost setting amount for some privatised assets
705 - 55 Order of application of sections 705 - 40, 705 - 45 and 705 - 47
705 - 56 Modification for tax cost setting in relation to leases
705 - 57 Adjustment to tax cost setting amount where loss of pre - CGT status of membership interests in joining entity
705 - 58 Assets and liabilities not set off against each other
705 - 59 Exception: treatment of linked assets and liabilities
How to work out the allocable cost amount
705 - 60 What is the joined group's allocable cost amount for the joining entity?
705 - 62 No double counting of amounts in allocable cost amount
705 - 65 Cost of membership interests in the joining entity--step 1 in working out allocable cost amount
705 - 70 Liabilities of the joining entity--step 2 in working out allocable cost amount
705 - 75 Liabilities of the joining entity--reductions for purposes of step 2 in working out allocable cost amount
705 - 76 Liability arising from transfer or assignment of securitised assets
705 - 80 Liabilities of the joining entity--reductions/increases for purposes of step 2 in working out allocable cost amount
705 - 85 Liabilities of the joining entity--increases for purposes of step 2 in working out allocable cost amount
705 - 90 Undistributed, taxed profits accruing to joined group before joining time--step 3 in working out allocable cost amount
705 - 93 If pre - joining time roll - over from foreign resident company or head company--step 3A in working out allocable cost amount
705 - 95 Pre - joining time distributions out of certain profits--step 4 in working out allocable cost amount
705 - 100 Losses accruing to joined group before joining time--step 5 in working out allocable cost amount
705 - 102 FRT disallowed amounts accruing to joined group before joining time--step 5A in working out allocable cost amount
705 - 105 Continuity of holding membership interests--steps 3 to 5A in working out allocable cost amount
705 - 110 If joining entity transfers a loss to the head company--step 6 in working out allocable cost amount
705 - 112 If joining entity transfers a FRT disallowed amount to the head company--step 6A in working out allocable cost amount
705 - 115 If head company becomes entitled to certain deductions--step 7 in working out allocable cost amount
How to work out a pre - CGT factor for assets of joining entity
705 - 125 Pre - CGT proportion for joining entity
Subdivision 705 - B--Case of group formation
Guide to Subdivision 705 - B
705 - 130 What this Subdivision is about
Application and object
705 - 135 Application and object of this Subdivision
Modified application of Subdivision 705 - A
705 - 140 Subdivision 705 - A has effect with modifications
705 - 145 Order in which tax cost setting amounts are to be worked out where subsidiary members have membership interests in other subsidiary members
705 - 147 Adjustment in working out step 3A of allocable cost amount to take account of membership interests held by subsidiary members in other such members
705 - 155 Adjustments to restrict step 4 reduction of allocable cost amount to effective distributions to head company in respect of direct membership interests
705 - 160 Adjustment to allocation of allocable cost amount to take account of owned profits or losses of certain entities that become subsidiary members
705 - 163 Modified application of section 705 - 57
Subdivision 705 - C--Case where a consolidated group is acquired by another
Guide to Subdivision 705 - C
705 - 170 What this Subdivision is about
Application and object
705 - 175 Application and object of this Subdivision
Modified application of Division 701 in relation to acquired group etc.
705 - 180 Modifications of Division 701
Modified application of Subdivision 705 - A in relation to acquiring group
705 - 185 Subdivision 705 - A has effect with modifications
Modifications of Subdivision 705 - A for the purposes of this Subdivision
705 - 195 Modified application of subsection 705 - 65(6)
705 - 200 Modified application of section 705 - 85
Subdivision 705 - D--Where multiple entities are linked by membership interests
Guide to Subdivision 705 - D
705 - 210 What this Subdivision is about
Application and object
705 - 215 Application and object of this Subdivision
Modified application of Subdivision 705 - A
705 - 220 Subdivision 705 - A has effect with modifications
705 - 225 Order in which tax cost setting amounts are to be worked out where linked entities have membership interests in other linked entities
705 - 227 Adjustment in working out step 3A of allocable cost amount to take account of membership interests held by linked entities in other linked entities
705 - 230 Adjustments to restrict step 4 reduction of allocable cost amount to effective distributions to head company in respect of direct membership interests
705 - 235 Adjustment to allocation of allocable cost amount to take account of owned profits or losses of certain linked entities
705 - 240 Modified application of section 705 - 57
Subdivision 705 - E--Adjustments for errors etc.
Guide to Subdivision 705 - E
705 - 300 What this Subdivision is about
Operative provisions
705 - 305 Object of this Subdivision
705 - 310 Operation of Part IVA of the Income Tax Assessment Act 1936
705 - 315 Errors that attract special adjustment action
705 - 320 Tax cost setting amounts taken to be correct
Division 707--Losses for head companies when entities become members etc.
Subdivision 707 - A--Transfer of losses to head company
Guide to Subdivision 707 - A
707 - 100 What this Subdivision is about
707 - 105 Who can utilise the loss?
Objects
707 - 110 Objects of this Subdivision
Application
707 - 115 What losses this Subdivision applies to
Transfer of loss from joining entity to head company
707 - 120 Transfer of loss from joining entity to head company
707 - 125 Modified business continuity test for companies' post - 1999 losses
707 - 130 Modified pattern of distributions test
707 - 135 Transferring loss transferred to joining entity because business continuity test was satisfied
Effect of transfer of loss
707 - 140 Effect of transfer of loss
Cancelling the transfer of the loss
707 - 145 Cancelling the transfer of the loss
What happens if the loss is not transferred?
707 - 150 Loss cannot be utilised for income year ending after the joining time
Subdivision 707 - B--Can a transferred loss be utilised?
Guide to Subdivision 707 - B
707 - 200 What this Subdivision is about
Operative provisions
707 - 205 Modified period for test for maintaining same ownership
707 - 210 Utilisation of certain losses transferred from a company depends on company that made the losses earlier
Subdivision 707 - C--Amount of transferred losses that can be utilised
Guide to Subdivision 707 - C
707 - 300 What this Subdivision is about
Object
707 - 305 Object of this Subdivision
How much of a transferred loss can be utilised?
707 - 310 How much of a transferred loss can be utilised?
707 - 315 What is a bundle of losses?
707 - 320 What is the available fraction for a bundle of losses?
707 - 325 Modified market value of an entity becoming a member of a consolidated group
707 - 330 Losses transferred from former head company
707 - 335 Limit on utilising transferred losses if circumstances change during income year
707 - 340 Utilising transferred losses while exempt income remains
707 - 345 Other provisions are subject to this Subdivision
Subdivision 707 - D--Special rules about losses
707 - 400 Head company's business before and after consolidation not compared
707 - 410 Exit history rule does not treat entity as having made a loss
707 - 415 Application of losses with nil available fraction for certain purposes
Division 709--Other rules applying when entities become subsidiary members etc.
Subdivision 709 - A--Franking accounts
Guide to Subdivision 709 - A
709 - 50 What this Subdivision is about
Object
709 - 55 Object of this Subdivision
Treatment of franking accounts at joining time
709 - 60 Nil balance franking account for joining entity
Treatment of subsidiary member's franking account
709 - 65 Subsidiary member's franking account does not operate
Treatment of head company's franking account
709 - 70 Credits arising in head company's franking account
709 - 75 Debits arising in head company's franking account
Franking distributions by subsidiary member
709 - 80 Subsidiary member's distributions on employee shares and certain preference shares taken to be distributions by the head company
709 - 85 Non - share distributions by subsidiary members taken to be distributions by head company
709 - 90 Subsidiary member's distributions to foreign resident taken to be distributions by head company
Payment of group liability by former subsidiary member
709 - 95 Payment of group liability by former subsidiary member
709 - 100 Refund of income tax to former subsidiary member
Subdivision 709 - B--Imputation issues
Guide to Subdivision 709 - B
709 - 150 What this Subdivision is about
Operative provisions
709 - 155 Testing consolidated groups
709 - 160 Subsidiary member is exempting entity
709 - 165 Subsidiary member is former exempting entity
709 - 170 Head company and subsidiary are exempting entities
709 - 175 Head company is former exempting entity
Subdivision 709 - C--Treatment of excess franking deficit tax offsets when entity becomes a subsidiary member of a consolidated group
Guide to Subdivision 709 - C
709 - 180 What this Subdivision is about
709 - 185 Joining entity's excess franking deficit tax offsets transferred to head company
709 - 190 Exit history rule not to treat leaving entity as having a franking deficit tax offset excess
Subdivision 709 - D--Deducting bad debts
Guide to Subdivision 709 - D
709 - 200 What this Subdivision is about
Application and object
709 - 205 Application of this Subdivision
709 - 210 Object of this Subdivision
Limit on deduction of bad debt
709 - 215 Limit on deduction of bad debt
Extension of Subdivision to debt/equity swap loss
709 - 220 Limit on deduction of swap loss
Division 711--Tax cost setting amount for membership interests where entities cease to be subsidiary members of consolidated groups
Guide to Division 711
711 - 1 What this Division is about
Application and object of this Division
711 - 5 Application and object of this Division
Tax cost setting amount for membership interests etc.
711 - 10 Tax cost setting amount worked out under this Division
711 - 15 Tax cost setting amount where no multiple exit
711 - 20 What is the old group's allocable cost amount for the leaving entity?
711 - 25 Terminating values of the leaving entity's assets--step 1 in working out allocable cost amount
711 - 30 What is the head company's terminating value for an asset?
711 - 35 If head company becomes entitled to certain deductions--step 2 in working out allocable cost amount
711 - 40 Liabilities owed to the leaving entity by members of the old group--step 3 in working out allocable cost amount
711 - 45 Liabilities etc. owed by the leaving entity--step 4 in working out allocable cost amount
711 - 46 Liability arising from transfer or assignment of securitised assets
711 - 55 Tax cost setting amount for membership interests where multiple exit
711 - 65 Membership interests treated as having been acquired before 20 September 1985
711 - 70 Additional integrity rule if membership interests treated as having been acquired before 20 September 1985 under section 711 - 65--application of Division 149 to head company
711 - 75 Additional integrity rule if membership interests treated as having been acquired before 20 September 1985 under section 711 - 65--application of CGT event K6
Division 713--Rules for particular kinds of entities
Subdivision 713 - A--Trusts
Working out a joined group's allocable cost amount for a joining trust
713 - 20 Increasing the step 1 amount for settled capital that could be distributed tax free in respect of discretionary interests
713 - 25 Undistributed, realised profits that accrue to joined group before joining time and could be distributed tax free--step 3 in working out allocable cost amount
Determining destination of distribution by non - fixed trust
713 - 50 Factors to consider
Subdivision 713 - C--Some unit trusts treated like head companies of consolidated groups
Guide to Subdivision 713 - C
713 - 120 What this Subdivision is about
Object of this Subdivision
713 - 125 Object of this Subdivision
Choice to form a consolidated group
713 - 130 Choosing to form a consolidated group
Effects of choice
713 - 135 Effects of choice
713 - 140 Modifications of the applied law
Subdivision 713 - E--Partnerships
Guide to Subdivision 713 - E
713 - 200 What this Subdivision is about
Objects
713 - 205 Objects of this Subdivision
Partnership cost setting interests etc.
713 - 210 Partnership cost setting interests
713 - 215 Terminating value for partnership cost setting interest
Setting tax cost of partnership cost setting interests
713 - 220 Set tax cost of partnership cost setting interests if partner joins consolidated group
713 - 225 Tax cost setting amount for partnership cost setting interest
Special rules where partnership joins consolidated group
713 - 235 Partnership joins group--set tax cost of partnership assets
713 - 240 Partnership joins group--tax cost setting amount for partnership asset
Special rules where partnership leaves consolidated group
713 - 250 Partnership leaves group--standard provisions modified
713 - 255 Partnership leaves group--tax cost setting amount for partnership cost setting interests
713 - 260 Partnership leaves group--tax cost setting amount for assets consisting of being owed certain liabilities
713 - 265 Partnership leaves group--adjustments to allocable cost amount of partner who also leaves group
Subdivision 713 - L--Life insurance companies
Guide to Subdivision 713 - L
713 - 500 What this Subdivision is about
General modifications for life insurance companies
713 - 505 Head company treated as a life insurance company
713 - 510 Certain subsidiaries of life insurance companies cannot be members of consolidated group
713 - 510A Disregard single entity rule in working out certain amounts in respect of life insurance company
Life insurance companies' liabilities on joining consolidated group
713 - 511 Treatment of certain liabilities for income year when life insurance company joins consolidated group
Tax cost setting rules for life insurance companies joining consolidated group
713 - 515 Certain assets taken to be retained cost base assets where life insurance company joins group
713 - 520 Valuing certain liabilities where life insurance company joins group
713 - 525 Obligation to value certain assets and liabilities at joining time
Losses of life insurance companies joining consolidated group
713 - 530 Treatment of certain losses of life insurance company
Losses of life insurance companies' subsidiaries joining consolidated group
713 - 535 Losses of entities whose membership interests are complying superannuation assets of life insurance company
713 - 540 Losses of entities whose membership interests are segregated exempt assets of life insurance company
Imputation rules for life insurance companies joining consolidated group
713 - 545 Treatment of franking surplus in franking account of life insurance subsidiary joining group
713 - 550 Treatment of head company's franking account after joining
Liabilities for life insurance companies leaving consolidated group
713 - 565 Treatment of certain liabilities for income year when life insurance company leaves consolidated group
Losses for life insurance companies leaving consolidated group
713 - 570 Certain losses transferred to leaving company
Tax cost setting rules for life insurance companies leaving consolidated group
713 - 575 Terminating value of certain assets where life insurance company leaves group
713 - 580 Valuing certain liabilities where life insurance company leaves group
713 - 585 Obligation to value certain assets and liabilities at leaving time
Subdivision 713 - M--General insurance companies
Guide to Subdivision 713 - M
713 - 700 What this Subdivision is about
Tax cost setting rules for general insurance companies joining consolidated group
713 - 705 Certain assets taken to be retained cost base assets where general insurance company joins group
Liabilities and reserves of general insurance companies joining and leaving consolidated groups
713 - 710 Treatment of liabilities and reserves for income year when general insurance company joins or leaves group
713 - 715 If general insurance company joins consolidated group
713 - 720 If general insurance company leaves consolidated group
713 - 725 Treatment of certain assets and liabilities of general insurance companies
Division 715--Interactions between this Part and other areas of the income tax law
Subdivision 715 - A--Treatment of unrealised losses existing when ownership or control of a company changes before or during consolidation
Object
715 - 15 Object of this Subdivision
Effect on Subdivision 165 - CC of a company becoming a member of a consolidated group
715 - 25 Subdivision 165 - CC stops applying to earlier changeover time
715 - 30 Meaning of 165 - CC tagged asset
715 - 35 Meaning of final RUNL
165 - CC tagged assets that affect tax cost setting amounts
715 - 50 Step 1 amount is reduced if membership interest in subsidiary member is 165 - CC tagged asset and business continuity test is failed
715 - 55 Step 2 amount is affected if liability of subsidiary member is 165 - CC tagged asset of another group member and business continuity test is failed
165 - CC tagged assets that form loss denial pools of head company when consolidated group is formed
715 - 60 Assets that the head company already owns
715 - 70 Assets of subsidiary member that become those of head company
How Subdivision 165 - CC applies to consolidated groups
715 - 75 Extension of single entity rule and entry history rule
Effect on Subdivision 165 - CC of entity leaving consolidated group
715 - 80 Application of sections 715 - 85 to 715 - 110
715 - 85 First changeover time for leaving company at or after leaving time
715 - 90 How business continuity test applies if leaving time is changeover time for leaving company
715 - 95 If ownership and control of leaving entity have not changed since head company's last changeover time
715 - 100 First choice: adjustable values of leaving assets reduced to nil
715 - 105 Second choice: head company's final RUNL applied in reducing adjustable values of leaving assets that are loss assets
715 - 110 Third choice: loss denial pool of leaving entity created
Effect of assets in loss denial pool of head company becoming assets of leaving entity
715 - 120 What happens
715 - 125 First choice: adjustable values of leaving assets reduced to nil
715 - 130 Second choice: pool's loss denial balance applied in reducing adjustable values of leaving assets that are loss assets
715 - 135 Third choice: loss denial pool of leaving entity created
Effect of first and second choices on various kinds of assets
715 - 145 Effect of choice on adjustable value of leaving asset
General provisions about loss denial pools
715 - 155 When asset leaves pool
715 - 160 How loss denial balance is applied to losses realised on assets in pool
715 - 165 When pool ceases to exist
Choices under this Subdivision
715 - 175 When choice must be made
715 - 180 Head company to notify leaving entity of choice
715 - 185 Leaving entity may choose to cancel loss denial pool by reducing adjustable values of assets in the pool
Subdivision 715 - B--How Subdivision 165 - CD applies to consolidated groups and leaving entities
How Subdivision 165 - CD applies to consolidated groups
715 - 215 Extension of single entity rule and entry history rule
715 - 225 Working out adjusted unrealised loss using individual asset method
715 - 230 No reductions or other consequences for interests subject to loss cancellation under Subdivision 715 - H
How Subdivision 165 - CD applies to leaving entity that is a company
715 - 240 Application of sections 715 - 245 to 715 - 260
715 - 245 If ownership or control of leaving entity has altered since head company's last alteration time or formation of group
715 - 250 If head company has had an alteration time but ownership and control of leaving entity have not altered since
715 - 255 Consequences if leaving entity is a loss company at the leaving time
715 - 260 If neither of sections 715 - 245 and 715 - 250 applies
715 - 265 Head company does not have relevant equity or debt interest in a loss company if widely held top company does not have such an interest
How Subdivision 165 - CD applies to leaving entity that is a trust
715 - 270 Subdivision 165 - CD applies
Subdivision 715 - C--Common rules for the purposes of Subdivisions 715 - A and 715 - B
715 - 290 Additional assumptions to be made when using reference time
Subdivision 715 - D--Treatment of company's deferred losses under Subdivision 170 - D on joining a consolidated group
Key terminology
715 - 310 What is a 170 - D deferred loss , and when it revives
Deferred loss on 165 - CC tagged asset
715 - 355 Head company's own deferred losses at formation time
715 - 360 Deferred losses brought in by subsidiary member
715 - 365 How loss denial balance is applied when 170 - D deferred loss revives
Subdivision 715 - E--Interactions with Division 775 (Foreign currency gains and losses)
715 - 370 Cost setting--reference time for determining currency exchange rate effect
Subdivision 715 - F--Interactions with Division 230 (financial arrangements)
715 - 375 Cost setting on joining--amount of liability that is Division 230 financial arrangement
715 - 378 Cost setting on joining--head company's right to receive or obligation to provide payment
715 - 379 Cost setting on leaving--amount of intragroup liability that is Division 230 financial arrangement
715 - 379A Cost setting on leaving--head company's or leaving entity's right to receive or obligation to provide payment
715 - 380 Exit history rule not to affect certain matters related to Division 230 financial arrangements
715 - 385 Exit history rule and elective methods applying to Division 230 financial arrangements
Subdivision 715 - G--How value shifting rules apply to a consolidated group
715 - 410 Extension of single entity rule and entry history rule
715 - 450 No reductions or other consequences for interests subject to loss cancellation under Subdivision 715 - H
Subdivision 715 - H--Cancelling loss on realisation event for direct or indirect interest in a member of a consolidated group
715 - 610 Cancellation of loss
715 - 615 Exception for interests in entity leaving consolidated group
715 - 620 Exception if loss attributable to certain matters
Subdivision 715 - J--Entry history rule and choices
Head company's choice overriding entry history rule
715 - 660 Head company's choice overriding entry history rule
Choices head company can make ignoring entry history rule to override inconsistencies
715 - 665 Head company's choice to override inconsistency
Choices with ongoing effect
715 - 670 Ongoing effect of choices made by entities before joining group
715 - 675 Head company adopting choice with ongoing effect
Subdivision 715 - K--Exit history rule and choices
Choices leaving entity can make ignoring exit history rule
715 - 700 Choices leaving entity can make ignoring exit history rule
Choices leaving entity can make ignoring exit history rule to overcome inconsistencies
715 - 705 Choices leaving entity can make ignoring exit history rule to overcome inconsistencies
Subdivision 715 - U--Effect on conduit foreign income
715 - 875 Extension of single entity rule and entry history rule
715 - 880 No CFI for leaving entity
Subdivision 715 - V--Entity ceasing to be exempt from income tax on becoming subsidiary member of consolidated group
715 - 900 Transition time taken to be just before joining time
Subdivision 715 - W--Effect on arrangements where CGT roll - overs are obtained
715 - 910 Effect on restructures--original entity becomes a subsidiary member
715 - 915 Effect on restructures--original entity is a head company
715 - 920 Effect on restructures--original entity is a head company that becomes a subsidiary member of another group
715 - 925 Effect on restructures--original entity ceases being a subsidiary member
Division 716--Miscellaneous special rules
Subdivision 716 - A--Assessable income and deductions spread over several membership or non - membership periods
Guide to Subdivision 716 - A
716 - 1 What this Division is about
Operative provisions
716 - 15 Assessable income spread over 2 or more income years
716 - 25 Deductions spread over 2 or more income years
716 - 70 Capital expenditure that is fully deductible in one income year
Assessable income and deductions arising from share of net income of a partnership or trust, or from share of partnership loss
716 - 75 Application
716 - 80 Head company's assessable income and deductions
716 - 85 Entity's assessable income and deductions for a non - membership period
716 - 90 Entity's share of assessable income or deductions of partnership or trust
716 - 95 Special rule if not all partnership or trust's assessable income or deductions taken into account in working out amount
716 - 100 Spreading period
Subdivision 716 - E--Tax cost setting for exploration and prospecting assets
716 - 300 Prime cost method of working out decline in value
Subdivision 716 - G--Low - value and software development pools
Assets in joining entity's low - value pool
716 - 330 Head company's deductions for decline in value of assets in joining entity's low - value pool
Entity leaving group with asset allocated to head company's low - value pool
716 - 335 Entity leaving group with asset allocated to head company's low - value pool
Depreciating assets arising from expenditure in joining entity's software development pool
716 - 340 Depreciating assets arising from expenditure in joining entity's software development pool
Software development pools if entity leaves consolidated group
716 - 345 Head company taken not to have incurred expenditure
Subdivision 716 - S--Miscellaneous consequences of tax cost setting
716 - 400 Tax cost setting and bad debts
716 - 440 Membership interests in joining entity not subject to CGT under Division 855--foreign entity ceasing to hold interests
Subdivision 716 - V--Research and Development
716 - 500 Head company bound by agreements binding on subsidiary members
716 - 505 History for entitlement to tax offset: joining entity
716 - 510 History for entitlement to tax offset: leaving entity
Subdivision 716 - Z--Other
716 - 800 Allocating amounts to periods if head company and subsidiary member have different income years
716 - 850 Grossing up threshold amounts for periods of less than 365 days
716 - 855 Working out the cost base or reduced cost base of a pre - CGT asset after certain roll - overs
716 - 860 CGT event straddling joining or leaving time
Division 717--International tax rules
Subdivision 717 - A--Foreign income tax offsets
717 - 1 What this Subdivision is about
Object
717 - 5 Object of this Subdivision
Foreign income tax on amounts in head company's assessable income
717 - 10 Head company taken to be liable for subsidiary member's foreign income tax
Subdivision 717 - D--Transfer of certain surpluses under CFC provisions and former FIF and FLP provisions: entry rules
Guide to Subdivision 717 - D
717 - 200 What this Subdivision is about
Object
717 - 205 Object of this Subdivision
Transfers
717 - 210 Attribution surpluses
717 - 220 FIF surpluses
717 - 227 Deferred attribution credits
Subdivision 717 - E--Transfer of certain surpluses under CFC provisions and former FIF and FLP provisions: exit rules
Guide to Subdivision 717 - E
717 - 235 What this Subdivision is about
Object
717 - 240 Object of this Subdivision
Transfers
717 - 245 Attribution surpluses
717 - 255 FIF surpluses
717 - 262 Deferred attribution credits
Subdivision 717 - O--Offshore banking units
Guide to Subdivision 717 - O
717 - 700 What this Subdivision is about
717 - 705 Object of this Subdivision
717 - 710 Head company treated as OBU
Division 719--MEC groups
Subdivision 719 - A--Modified application of Part 3 - 90 to MEC groups
719 - 2 Modified application of Part 3 - 90 to MEC groups
Subdivision 719 - B--MEC groups and their members
719 - 4 What this Subdivision is about
Basic concepts
719 - 5 What is a MEC group ?
719 - 10 What is a potential MEC group?
719 - 15 What is an eligible tier - 1 company ?
719 - 20 What is a top company and a tier - 1 company ?
719 - 25 Head company, subsidiary members and members of a MEC group
719 - 30 Treating entities as wholly - owned subsidiaries by disregarding employee shares
719 - 35 Treating entities held through non - fixed trusts as wholly - owned subsidiaries
719 - 40 Special conversion event--potential MEC group
719 - 45 Application of sections 703 - 20 and 703 - 25
Choice to consolidate a potential MEC group
719 - 50 Eligible tier - 1 companies may choose to consolidate a potential MEC group
719 - 55 When choice starts to have effect
719 - 60 Appointment of provisional head company
719 - 65 Qualifications for the provisional head company of a MEC group
719 - 70 Income year of new provisional head company to be the same as that of former provisional head company
719 - 75 Head company
Notice of events affecting group
719 - 76 Notice of choice to consolidate
719 - 77 Notice in relation to new eligible tier - 1 members etc.
719 - 78 Notice of special conversion event
719 - 79 Notice of appointment of provisional head company after formation of group
719 - 80 Notice of events affecting MEC group
Effects of change of head company
719 - 85 Application
719 - 90 New head company treated as substituted for old head company at all times before the transition time
719 - 95 No consequences of old head company becoming, and new head company ceasing to be, subsidiary member of the group
Subdivision 719 - BA--Group conversions involving MEC groups
719 - 120 Application
719 - 125 Head company of new group retains history of head company of old group
719 - 130 Provisions of this Part not to apply to conversion
719 - 135 Provisions of this Part applying to conversion despite section 719 - 130
719 - 140 Other provisions of this Part not applying to conversion
Subdivision 719 - C--MEC group cost setting rules: joining cases
Guide to Subdivision 719 - C
719 - 150 What this Subdivision is about
Application and object
719 - 155 Object of this Subdivision
Modified application of tax cost setting rules for joining
719 - 160 Tax cost setting rules for joining have effect with modifications
719 - 165 Trading stock value and registered emissions unit value not set for assets of eligible tier - 1 companies
719 - 170 Modified effect of subsections 705 - 175(1) and 705 - 185(1)
Subdivision 719 - F--Losses
Guide to Subdivision 719 - F
719 - 250 What this Subdivision is about
Maintaining the same ownership to be able to utilise loss
719 - 255 Special rules
719 - 260 Special test for utilising a loss because a company maintains the same owners
719 - 265 What is the test company?
719 - 270 Assumptions about the test company having made the loss for an income year
719 - 275 Assumptions about nothing happening to affect direct and indirect ownership of the test company
719 - 280 Assumptions about the test company failing to meet the conditions in section 165 - 12
Business continuity test and change of head company
719 - 285 Business continuity test and change of head company
Bundles of losses and their available fractions
719 - 300 Application
719 - 305 Subdivision 707 - C affects utilisation of losses made by ongoing head company while it was head company
719 - 310 Adjustment of available fractions for bundles of losses previously transferred to ongoing head company
719 - 315 Further adjustment of available fractions for all bundles
719 - 320 Limit on utilising losses other than the prior group losses
719 - 325 Cancellation of all losses in a bundle
Subdivision 719 - H--Imputation issues
719 - 425 Guide to Subdivision 719 - H
Operative provisions
719 - 430 Transfer of franking account balance on cessation event
719 - 435 Distributions by subsidiary members of MEC group taken to be distributions by head company
Subdivision 719 - I--Bad debts
Guide to Subdivision 719 - I
719 - 450 What this Subdivision is about
Maintaining the same ownership to be able to deduct bad debt
719 - 455 Special test for deducting a bad debt because a company maintains the same owners
719 - 460 Assumptions about nothing happening to affect direct and indirect ownership of the test company
719 - 465 Assumptions about the test company failing to meet the conditions in section 165 - 123
Subdivision 719 - J--MEC group cost setting rules: leaving cases
Guide to Subdivision 719 - J
719 - 500 What this Subdivision is about
719 - 505 Application and object of this Subdivision
719 - 510 Modified operation of paragraphs 711 - 15(1)(b) and (c)
Subdivision 719 - K--MEC group cost setting rules: pooling cases
Guide to Subdivision 719 - K
719 - 550 What this Subdivision is about
719 - 555 Application and object of this Subdivision
719 - 560 Pooled interests
719 - 565 Setting cost of reset interests
719 - 570 Cost setting amount
Subdivision 719 - T--Interactions between this Part and other areas of the income tax law: special rules for MEC groups
How Subdivision 165 - CC applies to MEC groups
719 - 700 Changeover times under section 165 - 115C or 165 - 115D
719 - 705 Additional changeover times for head company of MEC group
How Subdivision 165 - CD applies to MEC groups
719 - 720 Alteration times under section 165 - 115L or 165 - 115M
719 - 725 Additional alteration times for head company of MEC group
719 - 730 Some alteration times only affect interests in top company
719 - 735 Some alteration times affect only pooled interests
719 - 740 Head company does not have relevant equity or debt interest in a loss company if widely held top company does not have such an interest
How indirect value shifting rules apply to a MEC group
719 - 755 Effect on MEC group cost setting rules if head company is losing entity or gaining entity for indirect value shift
Cancelling loss on realisation event for direct or indirect interest in a subsidiary member of a MEC group
719 - 775 Cancellation of loss
719 - 780 Exception for pooled interests in eligible tier - 1 companies
719 - 785 Exception for interests in top company
719 - 790 Exception for interests in entity leaving MEC group
719 - 795 Exception if loss attributable to certain matters
Division 721--Liability for payment of tax where head company fails to pay on time
Guide to Division 721
721 - 1 What this Division is about
Object
721 - 5 Object of this Division
When this Division operates
721 - 10 When this Division operates
Joint and several liability of contributing member
721 - 15 Head company and contributing members jointly and severally liable to pay group liability
721 - 17 Notice of joint and several liability for general interest charge
721 - 20 Limit on liability where group first comes into existence
Tax sharing agreements
721 - 25 When a group liability is covered by a tax sharing agreement
721 - 30 TSA contributing members liable for contribution amounts
721 - 32 Notice of general interest charge liability under TSA
721 - 35 When a TSA contributing member has left the group clear of the group liability
721 - 40 TSA liability and group liability are linked
Table of Subdivisions
615 - A Choosing to obtain roll - overs
615 - B Further requirements for choosing to obtain roll - overs
615 - C Consequences of roll - overs
615 - D Consequences for the interposed company