Taxation Determination TD 2007/12
Date of effect: 2 May 2007





Appendix: 3. Taxation Determination TD 2006/59 [2] explains that the unsatisfied debts of a subsidiary at the time of deregistration are recognised as accounting liabilities in accordance with accounting standards. Therefore they are accounting liabilities of the subsidiary just before the leaving time for the purposes of subsection 711-45(1) in accordance with the leaving entity's accounting principles for tax cost setting. 4. Subsection 711-45(4) modifies the operation of subsection 711-45(1) in respect of intra-group liabilities: 5. Where a liquidated subsidiary has an outstanding liability to another member of the consolidated group at the time of its deregistration, it is likely that the corresponding asset of the other member will have little or no value. [3] If the market value of the corresponding asset is nil then, in accordance with section 711-45, there will be no amount subtracted for that intra-group liability under step 4 in the table in subsection 711-20(1). If the liquidated subsidiary has no other unsatisfied liabilities, the amount remaining after step 4 will not be negative and the head company will not be taken to have made a capital gain under CGT event L5. Previously released in draft form as TD 2006/D41


[ Note: This is a consolidated version of this document. Refer to the ATO Legal Database (http://law.ato.gov.au) to check its currency and to view the details of all changes.] | Ruling: 1. Yes. Subsection 711-45(4) of the Income Tax Assessment Act 1997 [1] provides that the amount of an intra-group liability for the purpose of applying subsection 711-45(1) is the market value of the corresponding asset of the member of the group at the time of deregistration. | Date of effect: 2. This Determination applies both before and after its date of issue. However, the Determination will not apply to taxpayers to the extent that it conflicts with the terms of settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10). | Commissioner of Taxation 2 May 2007 | If an accounting liability of the leaving entity is owed to a *member of the old group, the amount to be added for the liability is the *market value of the corresponding asset of the member.


Related rulings: TD 2006/59 TR 2006/10
Legislative references: ITAA 1997 711-20(1) ITAA 1997 711-45 ITAA 1997 711-45(1) ITAA 1997 711-45(4) TAA 1953
Subject references: capital gains tax CGT assets company consolidated group consolidation - capital gains tax consolidation - exiting consolidation - tax liabilities insolvency leaving entity leaving time liquidation member of a group ownership, interests, control & rights single entity rule subsidiary company subsidiary member of a consolidated group voluntary liquidation wholly owned wholly owned subsidiary