Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) This section has effect for the head company core purposes when the entity becomes a * subsidiary member of the group.
(2) The object of this section is to preserve any entitlement to accelerated depreciation for assets that become those of the * head company because subsection 701 - 1(1) (the single entity rule) applies when the entity becomes a * subsidiary member of the group. This is only to apply where the asset's * tax cost setting amount is not more than the entity's * terminating value for the asset.
Section applies to certain depreciating assets
(a) a * depreciating asset to which Division 40 applies becomes that of the * head company because subsection 701 - 1(1) (the single entity rule) applies when the entity becomes a * subsidiary member of the group; and
(b) just before the entity became a subsidiary member, subsection 40 - 10(3) or 40 - 12(3) of the Income Tax (Transitional Provisions) Act 1997 applied for the purpose of the entity working out the asset's decline in value under Division 40; and
Note: The effect of those subsections was to preserve an entitlement to accelerated depreciation.
(c) the * tax cost setting amount that applies in relation to the asset for the purposes of section 701 - 10 when it becomes an asset of the head company is not more than the entity's * terminating value for the asset.
Preservation of accelerated depreciation
(4) While the asset is held by the * head company under
subsection 701 - 1(1) (the single entity rule), the decline in its
value under Division 40 is worked out by replacing the component in the
formula in subsection 40 - 70(1) or 40 - 75(1) that includes the
asset's * effective life with the rate that would apply under subsection
42 - 160(1) or 42 - 165(1) of this Act if it had not been amended by
the New Business Tax System (Capital Allowances) Act 2001 .