Taxation Determination TD 2004/66
Date of effect: 1 July 2002







The number, subject heading, date of effect and paragraphs 1 to 3 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.] | 2. Under section 104-530 (CGT event L7) of the Income Tax Assessment Act 1997 (ITAA 1997), if the amount of a liability taken into account in working out the allocable cost amount (ACA) for an entity that becomes a subsidiary member of a consolidated group is later discharged for a different amount (the realised amount), the head company may make a capital loss. A capital loss will arise if the liability is discharged by the head company on or after 1 July 2002 and before 10 February 2010 and the ACA would have been greater had the realised amount been taken into account in working out the ACA. | 3. One of the conditions for CGT event L7 to apply is that a liability of an entity that becomes a subsidiary member of a consolidated group must have been taken into account in working out the ACA for the subsidiary member under Division 705 of the ITAA 1997 (see paragraph 104-530(3)(a) of the ITAA 1997). If an ACA is not worked out for an entity that becomes a subsidiary member of a consolidated group (for example, because it is a chosen transitional entity), CGT event L7 cannot apply to the later discharge of a liability that the entity had when it became a subsidiary member of the group. | Date of Effect: 4. This Determination applies to a capital loss under CGT event L7 that arises on or after 1 July 2002 and before 10 February 2010. 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 3 November 2004 | Previously issued as Draft TD 2004/D28


Related rulings: TR 92/20
Legislative references: TAA 1953 Pt IVAAA ITAA 1997 104-530 ITAA 1997 104-530(3)(a) ITAA 1997 Div 705
Subject references: accounting liabilities CGT event CGT event L7 consolidation consolidation - capital gains tax consolidation - liabilities discharge of liabilities