Taxation Determination TD 2004/70
Date of effect: 1 December 2004





Appendix: 2. The purpose of section 705-80 is to ensure that, where necessary, an adjustment for unrealised gains and losses is made to the amount added under subsection 705-70(1) at step 2 of the process for calculating the allocable cost amount (ACA) of a joining entity. 3. Section 705-80 adjusts the accounting liability recognised and measured at the joining time for the purposes of subsection 705-70(1) so that the ACA is the same as it would have been if the liability had been recognised for income tax purposes at the same time as it was recognised for accounting purposes. 4. An adjustment to the step 2 amount may be necessary under paragraph 705-80(1)(a) where (in the words of that paragraph): Two examples of this form of liability are accrued employee leave entitlements and foreign exchange gains and losses. 5. In other words, paragraph 705-80(1)(a) applies where the liability has been recognised for accounting purposes at the joining time but is not recognised for income tax purposes until a later time. 6. The situation where new evidence obtained after the joining time shows that a liability or a change in liability should have been recognised for accounting purposes at the joining time is dealt with separately by Taxation Determination TD 2004/71 and is referred to in Taxation Rulings TR 2004/14 and TR 2006/6. 7. Where an accounting liability (or a change thereof) is identified under paragraph 705-80(1)(a), subsection 705-80(1) requires that: | Date of effect: 8. This Determination applies to years commencing both before and after its date of issue. However, it does not apply to taxpayers to the extent that it conflicts with the terms of settlement of a dispute agreed to before the date of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20). Commissioner of Taxation 1 December 2004 Previously issued as Draft TD 2004/D60


The number, subject heading, date of effect and paragraph 1 of this document are a 'public ruling' for the purposes of Part IVAAA of the Taxation Administration Act 1953 and are legally binding on the Commissioner. | [ 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.] | 1. No, the phrase 'is taken into account at a later time' in paragraph 705-80(1)(a) of the Income Tax Assessment 1997 (ITAA 1997) [1] does not mean that an accounting liability, or a change to that accounting liability, that is first recognised after the joining time is required to be examined in determining whether section 705-80 applies. Paragraph 705-80(1)(a) only applies in certain circumstances where the accounting liability has been recognised at the joining time. | for income tax purposes, an accounting liability, or a change in the amount of an accounting liability, (other than one owed to a *member of the joined group) is taken into account at a later time than is the case in accordance with the joining entity's *accounting principles for tax cost setting.


Related rulings: TR 92/20 TR 2004/14 TR 2006/6 TD 2004/71
Legislative references: TAA 1953 Pt IVAAA ITAA 1997 705-70(1) ITAA 1997 705-80 ITAA 1997 705-80(1) ITAA 1997 705-80(1)(a)
Subject references: AASB accounting expenses accounting liabilities accounting principles accounting standards Australian Accounting Standards Board calculation of the allocable cost amount consolidation deferred expenses deferred tax liabilities joining entity joining entity's accounting principles for tax cost setting