Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 719.160

  (1A)   This section applies if an entity (the MEC joining entity ) becomes a * subsidiary member of a * MEC group at a time (the MEC joining time ).

  (1)   This section has effect for the head company core purposes set out in subsection   701 - 1(2).

General modifying rule

  (2)   The provisions mentioned in subsection   (3) operate, for the purposes of setting the * tax cost of an asset of the MEC joining entity, as if each * subsidiary member of the group (including the MEC joining entity) that is an * eligible tier - 1 company at the MEC joining time were a part of the * head company of the group, rather than a separate entity.

Note 1:   This subsection means that references in those provisions to matters internal to the group operate as if eligible tier - 1 companies 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 an eligible tier - 1 company actually holds those interests; and

(b)   provisions operating if the head company owns or controls another entity operate even if one or more eligible tier - 1 companies 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 an eligible tier - 1 company and the other entity.

Note 2:   If the MEC joining entity is an eligible tier - 1 company, this subsection means the assets of the entity do not have their tax cost reset at the MEC joining time. This is because Subdivision   705 - A (and related provisions) reset the tax cost of assets of subsidiary members of a group, but not assets of the head company.

  (3)   The provisions are:

  (a)   section   701 - 10 (about setting the tax cost of assets of an entity joining a group); and

  (b)   Subdivision   705 - A; and

  (c)   any other provision of this Act giving Subdivision   705 - A a modified effect in circumstances other than those covered by that Subdivision.

Note:   An example of provisions covered by paragraph   (c) are the provisions of Subdivision   705 - B giving Subdivision   705 - A a modified effect when a consolidated group is formed.