Income Tax Assessment Act 1997

s 711-55 — Tax cost setting amount for membership interests where multiple exit

(1) If 2 or more entities cease to be * subsidiary members of the old group at the same time because of an event happening in relation to one of them, the * tax cost setting amount for each * membership interest mentioned in paragraphs 711 ‑ 10(a) and (b) is worked out in accordance with this section. Object (2) The object of this section is to ensure that the * tax cost setting amount for * membership interests that each entity holds in another entity reflects a proportion of the other entity’s cost for its net assets. Tax cost setting amounts to be worked out for certain membership interests in all of the entities (3) A * tax cost setting amount must be worked out for each * membership interest (the subject interest ) that one of the entities holds in another of the entities just before the leaving time, and this must be done: (a) by applying section 711 ‑ 15 to the subject interest as if: (i) a reference in that section, or any provision of this Division that relates to it, to any membership interest that * members of the old group hold in the leaving entity were a reference to the subject interest; and (ii) a reference in that section, or any provision of this Division that relates to it, to liabilities owed by members of the old group included a reference to liabilities owed by any of the entities that cease to be * subsidiary members of the old group at the leaving time; and (b) by working out the tax cost setting amount for membership interests in entities that are held by other entities before working out the tax cost setting amount for membership interests in those other entities. Tax cost setting amount for membership interests acquired by head company (4) Then work out the * tax cost setting amount mentioned in paragraph 711 ‑ 10(a) for the * membership interests held by the * head company in the same way as under section 711 ‑ 15. Note: In doing so, tax cost setting amounts worked out under subsection (3) of this section for membership interests held by the leaving entity in other entities will be taken into account in working out the allocable cost amount for the leaving entity. Those tax cost setting amounts will in turn have been affected by any other tax cost setting amounts worked out under subsection (3) for membership interests in other entities. Tax cost setting amount for membership interests acquired by leaving entity (5) The * tax cost setting amount mentioned in paragraph 711 ‑ 10(b) for * membership interests of which the leaving entity becomes the holder will be one of the tax cost setting amounts worked out under subsection (3) of this section. Example: Companies A, B, C, D and E are all subsidiary members that leave the old group at the same time. Just before the leaving time, company A owned shares in company B and company C, and company B owned shares in companies D and E. First, work out company A’s tax cost setting amount for membership interests in company C and company B’s tax cost setting amount for membership interests in companies D and E by applying section 711 ‑ 15 in accordance with paragraph (3)(a) above. Next, work out company A’s tax cost setting amount for membership interests in company B under that section as so applied, taking into account the tax cost setting amount just worked out for company B’s assets consisting of shares in companies D and E. Finally, work out the head company’s tax cost setting amount for membership interests in company A under section 711 ‑ 15 in accordance with subsection (4) above, taking into account the tax cost setting amounts worked out for companies B and C.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2)

s 711-65 — Membership interests treated as having been acquired before 20 September 1985

When this section applies (1) This section applies unless: (a) Subdivision 705 ‑ C (about one group joining another consolidated group) applies in relation to the old group; and (b) the leaving entity is a * subsidiary member of the old group. (1A) To avoid doubt, this section applies regardless of whether the leaving entity ceases to be a * subsidiary member of the old group at the leaving time because another entity also ceases to be a subsidiary member of the old group at the leaving time. Interests treated as if purchased before 20 September 1985 (2) If this section applies, a number of the * membership interests in the leaving entity that * members of the old group hold are taken to have been acquired before 20 September 1985. Number of pre ‑ CGT membership interests (3) The number is the result of the formula in subsection (4), rounded down to: (a) the nearest whole number if the result is not already a whole number; or (b) zero if the result is a number more than zero but less than one. Formula (4) The formula is: where: leaving entity’s pre ‑ CGT proportion is the amount worked out under section 705 ‑ 125. Dealing with classes of membership interests (6) If there are 2 or more classes of * membership interests in the leaving entity, this section operates separately in relation to each class as if the interests in that class were all the interests in the entity. Allocation of the number to particular membership interests (7) The * head company must choose which particular * membership interests comprise the number worked out under subsection (2). Modification if leaving entity is a trust (8) If the leaving entity is a trust, a * membership interest in it is not taken into account under this section unless the membership interest is either a unit or an interest in the trust.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B)

s 711-70 — Additional integrity rule if membership interests treated as having been acquired before 20 September 1985 under section 711 ‑ 65—application of Division 149 to head company

(1) This section applies if: (a) the leaving entity held assets at the time it became a * subsidiary member of the old group (disregarding subsection 701 ‑ 1(1) (the single entity rule)); and (b) some or all of the assets: (i) stopped being * pre ‑ CGT assets under Division 149 at a time (the Division 149 time ) when the * head company of the group held them under subsection 701 ‑ 1(1) (the single entity rule); or (ii) would have stopped being pre ‑ CGT assets under Division 149 at a time (also the Division 149 time ) when the head company of the group held them under subsection 701 ‑ 1(1) (the single entity rule) if they had been pre ‑ CGT assets just before that time; and (c) the leaving entity was a subsidiary member of the group at that time. (2) The * pre ‑ CGT proportion of the leaving entity at the leaving time is taken to be nil. (3) Adjust the old group’s * allocable cost amount for the leaving entity as follows: (a) if the amount under subsection (4) exceeds the amount under subsection (6)—increase the allocable cost amount by the excess; (b) if the amount under subsection (4) falls short of the amount under subsection (6)—reduce the allocable cost amount by the shortfall. (4) Subject to subsection (5), the amount under this subsection is: (a) if Subdivision 705 ‑ A applied in relation to the leaving entity at the time it became a * subsidiary member of the old group—the total of the amounts that were taken into account under subsection 705 ‑ 65(1) for * membership interests in the leaving entity at that time; or (b) otherwise—assuming that Subdivision 705 ‑ A had applied in relation to the leaving entity at the time it became a subsidiary member of the old group, the total of the amounts that would have been taken into account under subsection 705 ‑ 65(1) for membership interests in the leaving entity at that time. (5) For the purposes of subsection (4), if a * membership interest in the leaving entity was covered under paragraph 705 ‑ 125(2)(a) (pre ‑ CGT interests) when it became a * subsidiary member of the old group, treat the amount that was taken into account for the membership interest under subsection 705 ‑ 65(1) as the interest’s * market value just after the Division 149 time. (6) The amount under this subsection is the old group’s * allocable cost amount for the leaving entity, worked out on the assumption that the leaving entity ceased to be a * subsidiary member of the old group just after the Division 149 time.

Amendment history: Inserted by No 68 of 2002, effective 24 Oct 2002 ( see s. 2) | Amended by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Repealed and substituted by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B)

s 711-75 — Additional integrity rule if membership interests treated as having been acquired before 20 September 1985 under section 711 ‑ 65—application of CGT event K6

(1) This section applies if the leaving entity ceases to be a * subsidiary member of the old group because of a situation giving rise to * CGT event A1, C2, E1, E2 or E8 in relation to one or more * membership interests in the leaving entity. (2) For the purposes of applying subsections 104 ‑ 230(2) and (8) in relation to those * membership interests: (a) disregard subsection 701 ‑ 1(1) (the single entity rule) in working out the * net value of the leaving entity; and (b) treat the reference in subsection 104 ‑ 230(2) to “Just before the other event happened” as a reference to “Just before the leaving time”. Note 1: The single entity rule will continue to apply in determining whether the property mentioned in subsection 104 ‑ 230(2) for the leaving entity was acquired on or after 20 September 1985. Note 2: However, in a case of multiple exit from a consolidated group (see section 711 ‑ 55), the property mentioned in subsection 104 ‑ 230(2) for the leaving entity may include membership interests in another entity leaving the group at the leaving time. To determine which of those membership interests were acquired on or after 20 September 1985 for the purposes of applying subsection 104 ‑ 230(2) to the leaving entity, see section 711 ‑ 65. (3) In determining the sum of the * cost bases of the property mentioned in subsection 104 ‑ 230(6), treat the cost base of an asset that is included in that property as: (a) if the asset has its * tax cost set at the leaving time under section 701 ‑ 50—its * tax cost setting amount; or (b) if the * terminating value of the asset is taken into account in working out the step 1 amount under section 711 ‑ 25 for the leaving entity—that terminating value; or (c) if the asset is taken into account in working out the step 3 amount under section 711 ‑ 40 for the leaving entity—the value of the asset that is so taken into account.

Amendment history: Inserted by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B)

s 713-20 — Increasing the step 1 amount for settled capital that could be distributed tax free in respect of discretionary interests

(1) The object of this section is to increase the step 1 amount worked out under section 705 ‑ 65 (for the purpose of working out the joined group’s allocable cost amount) if: (a) the joining entity is a trust; and (b) some or all of the * membership interests in the trust are neither units nor interests in the trust; and (c) some or all of the trust capital is settled capital that could be distributed tax free at the joining time. The increase in the step 1 amount takes account of the settled capital that could be distributed tax free. Note 1: As a result, the settled capital that could be distributed tax free is treated in a way that is analogous to the group’s cost of acquiring the trust: see subsection 705 ‑ 10(2). Note 2: Paragraph (1)(b) reflects the position that a distribution in respect of a unit or interest in the trust is generally covered by CGT event E4 and so is not tax ‑ free: see section 104 ‑ 70. (2) The step 1 amount worked out under section 705 ‑ 65 is increased by the amount worked out under the following method statement if, at the joining time, there are * membership interests (the discretionary interests ) in the trust each of which satisfies these conditions: (a) it is neither a unit nor an interest in the trust; (b) the entity that owned it at the joining time began to own it only because money or property was settled on the trust; (c) it either has no * cost base or it has a cost base of nil. Note: If a membership interest has a cost base greater than nil, the cost base is already taken into account in working out the step 1 amount under section 705 ‑ 65. Method statement Step 1. Add up: (a) each amount settled on the trust before or at the joining time; and (b) the * market value of each item of property settled on the trust before or at the joining time, worked out as at when the item was settled; except to the extent that that amount or market value forms part of the * cost base of a * membership interest in the trust that was taken into account in working out the step 1 amount under section 705 ‑ 65. Step 2. Work out how much of the step 1 amount would have been paid in respect of the discretionary interests if, at the joining time: (a) the entire trust capital and trust income had been realised and distributed; and (b) the trust had ended. Note: This may involve determining how a power of appointment would have been exercised. Section 713 ‑ 50 lists matters to have regard to in determining this. Step 3. Reduce the step 2 amount by so much of it as: (a) would have been included in the assessable income of any * member of the trust who owned any of the discretionary interests at the joining time; or (b) would have been taken into account in working out a * capital gain or * capital loss made by such a member. Step 4. Work out how much of the step 1 amount consists of one or more of these: (a) an amount settled on the trust directly by the * head company of the * consolidated group (whether or not the group was in existence when the amount or item was settled on the trust); (b) an amount settled on the trust directly by any other entity not excluded by subsection (3) (which covers entities that are not independent and unconnected donors to the trust); (c) the * market value of an item of property settled on the trust directly by the head company; (d) the market value of an item of property settled on the trust directly by any other entity not excluded by subsection (3). Step 5. The step 1 amount worked out under section 705 ‑ 65 is increased by the lesser of: (a) the step 3 amount worked out under this method statement; and (b) the step 4 amount worked out under this method statement. (3) This subsection excludes these entities for the purposes of step 4 of the method statement in subsection (2): Entities that are not independent and unconnected donors to the trust Item This entity is excluded: 1 An entity that is a * member of the * consolidated group at the joining time 2 An entity that has been a * member of the * consolidated group at any time before the joining time, even if it was not such a member when it settled the amount or item of property on the joining entity 3 An entity that, because of a * scheme, will or may become a * member of the * consolidated group at some time after the joining time 4 An entity that, when the amount or item of property was settled on the joining entity, was an * associate of an entity covered by item 1, 2 or 3 5 An entity that, in settling the amount or item of property on the joining entity, acted in accordance with the directions, instructions or wishes of one or more entities, at least one of which is covered by item 1, 2, 3 or 4 (whether those directions, instructions or wishes were communicated directly or indirectly, including through interposed entities) 6 A company or trust that an entity covered by item 1, 2 or 3 would be taken to * control (for value shifting purposes) when the company or trust settled the amount or item of property on the joining entity, if each entity covered by item 1, 2, 3 or 4 had been at that time an * associate of every other entity covered by item 1, 2, 3 or 4 7 A partnership if, when the partnership settled the amount or item of property on the joining entity, a * member of the partnership was an entity covered by item 1, 2, 3, 4 or 6

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11)

s 713-25 — Undistributed, realised profits that accrue to joined group before joining time and could be distributed tax free—step 3 in working out allocable cost amount

(1) For the purposes of step 3 in the table in section 705 ‑ 60, if the joining entity is a trust, the step 3 amount is the sum of the trust’s realised profits, to the extent that: (a) they accrued to the joined group before the joining time (as defined in subsection 705 ‑ 90(7)); and (b) as at the joining time, they have not been distributed to * members of the trust; and (c) if each of them were distributed as mentioned in paragraphs 705 ‑ 90(7)(a) and (b): (i) they would be distributed otherwise than in respect of a unit or an interest in the trust; or (ii) their non ‑ assessable parts for the purposes of section 104 ‑ 70 would be disregarded in working out whether or not a * capital gain had been made because of CGT event E4; except to the extent that they recouped losses of any * sort that accrued to the joined group before the joining time (as defined in subsection 705 ‑ 90(8)). Note: If the joining entity, or an entity interposed between the head company and the joining entity, is a non ‑ fixed trust, this section may involve determining how a power of appointment would have been exercised. Section 713 ‑ 50 lists matters to have regard to in determining this. Trusts not covered (2) Subsection (1) does not apply to a trust that is a * corporate tax entity at the joining time. Note: This excludes corporate unit trusts and public trading trusts, which are covered by the imputation system.

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11) | Amended by No 23 of 2005, effective s. 4, Schedule 1 (items 2–8, 11, 13–19, 21–24, 26, 27, 29–32), Schedule 2 (items 1–11, 14), Schedule 3 (items 1–13, 75–102, 111(1)–(3)), Schedules 4–6, 8, 10 and Schedule 12 (items 2–6, 11(1)): Royal Assent Schedule 12 (item 1): 1 July 2000

s 713-50 — Factors to consider

In working out, for the purposes of this Part, how much of something a * non ‑ fixed trust would have distributed to an entity, or in respect of a * membership interest in the trust, have regard to all relevant factors, including: (a) the pattern of any previous distributions by the trust; and (b) by whom the trust has from time to time been * controlled (for value shifting purposes).

Amendment history: Inserted by No 117 of 2002, effective s 4: 2 Dec 2002 (s 2(1) item 1) Sch 1, 2, Sch 3 (items 1–7), Sch 4, Sch 5 (items 1–12), Sch 6–8, Sch 11 (items 8–11), Sch 12 (items 1–23), Sch 13 (items 1–14) and Sch 14 (items 8–13): 24 Oct 2002 (s 2(1) items 2, 3, 5, 6, 9) Sch 17: 29 June 2002 (s 2(1) item 11)

s 713-120 — What this Subdivision is about

A public trading trust can sometimes choose to form a consolidated group and be treated like a company and head company of the group. The treatment affects the trust, the trustee and other entities connected with the trust (such as members of the trust and entities the trustee holds membership interests in). Table of sections Object of this Subdivision 713 ‑ 125 Object of this Subdivision Choice to form a consolidated group 713 ‑ 130 Choosing to form a consolidated group Effects of choice 713 ‑ 135 Effects of choice 713 ‑ 140 Modifications of the applied law

Amendment history: Inserted by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 53 of 2016, effective Sch 1 (item 1), Sch 2, Sch 3 (items 2–4), Sch 4 (items 1–5), Sch 5 (items 2, 29–67, 75), Sch 6 (items 21–34), Sch 8 (item 1) and Sch 9: 5 May 2016 (s 2(1) items 2, 4)

s 713-125 — Object of this Subdivision

(1) The main object of this Subdivision is to provide, by the means described in subsections (2) and (3), for certain unit trusts to be treated like companies, and therefore like * head companies of * consolidated groups, with consequent effects on other entities including: (a) the trustees; and (b) * members of the trusts; and (c) entities the trustees hold * membership interests in. (2) The first means is letting a * public trading trust, that could become the * head company of a * consolidated group if the trust were a company, choose to form such a group (with other entities as * subsidiary members). (3) The second means is changing the way in which the law relating to income tax applies on and after the time the choice takes effect, so that law (with some modifications) applies in relation to the trust or the trustee (as appropriate) in a way corresponding to the way in which that law applies in relation to a company. Note: The law relating to income tax includes legislation relating to associated imposts (such as those connected with the imputation system).

Amendment history: Inserted by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 53 of 2016, effective Sch 1 (item 1), Sch 2, Sch 3 (items 2–4), Sch 4 (items 1–5), Sch 5 (items 2, 29–67, 75), Sch 6 (items 21–34), Sch 8 (item 1) and Sch 9: 5 May 2016 (s 2(1) items 2, 4)

s 713-130 — Choosing to form a consolidated group

A trust may make a choice under section 703 ‑ 50 (Choice to consolidate a consolidatable group), as if the trust were a company (the assumed company ), but only if: (a) the assumed company could make the choice, if it beneficially owned the * membership interests in other entities that are legally owned by the trustee; and (b) the day specified in the choice is the first day of an income year for which the trust is a * public trading trust. Note: Assuming that a trust is a company also involves assuming: (a) that the company has characteristics of the trust, such as the location of the central management and control (which is relevant to residence), the business of the trust, not being incorporated etc.; and (b) that membership interests in the trust are membership interests in the company (owned by the same persons and in the same way as membership interests in the trust are owned); and (c) that the company’s taxable income is taxed at the same rate as the trust’s net income.

Amendment history: Inserted by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 53 of 2016, effective Sch 1 (item 1), Sch 2, Sch 3 (items 2–4), Sch 4 (items 1–5), Sch 5 (items 2, 29–67, 75), Sch 6 (items 21–34), Sch 8 (item 1) and Sch 9: 5 May 2016 (s 2(1) items 2, 4)

s 713-135 — Effects of choice

(1) If the trust makes the choice, the law (the applied law ) described in subsection (2) applies in relation to the trust in a way corresponding to the way in which that law applies to a company. The applied law applies in that way in relation to the trust or trustee (as appropriate): (a) with the appropriate modifications (including those described in section 713 ‑ 140, so far as they are appropriate); and (b) in relation to all times at or after the start of the day specified in the choice; and (c) so far as it is relevant to the operation of the applied law in relation to the trust and a time at or after the start of that day—in relation to a time when the trust existed before the start of that day. Note 1: The application of the applied law in this way affects not only the trust and the trustee but also other entities connected with the trust, such as members of the trust and entities in which the trustee holds membership interests. Some examples of that effect are that: (a) a consolidated group comes into existence on the day specified in the choice; and (b) there may be a scrip for scrip roll ‑ over for an entity exchanging its shares in a company for membership interests in the trust. Note 2: The application of the applied law in this way involves treatment of characteristics, things and persons relating to the trust corresponding to the treatment by the applied law of analogous characteristics, things and persons relating to a company (as envisaged in the note to section 713 ‑ 130). These are some examples of analogous things and analogous persons: (a) units in the trust and shares in a company; (b) unitholders in the trust and shareholders in a company; (c) trust voting interests and voting shares in a company. (2) The applied law is: (a) this Act (other than this Subdivision); and (b) an Act that imposes any impost payable under this Act; and (c) the Income Tax Rates Act 1986 ; and (d) the Taxation Administration Act 1953 , so far as it relates to an Act covered by paragraph (a), (b) or (c); and (e) any other Act, so far as it relates to an Act covered by paragraph (a), (b), (c) or (d); and (f) regulations and other legislative instruments under an Act covered by any of the preceding paragraphs. (3) Subsection (1) does not make an entity liable to a criminal, civil or administrative penalty. Note: An entity is liable to such a penalty under the applied law only if that law, as it applies apart from subsection (1), makes the entity liable.

Amendment history: Inserted by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23)

s 713-140 — Modifications of the applied law

Overview (1) This section describes modifications of the applied law in its application in relation to a trust or trustee under section 713 ‑ 135, but does not limit the modifications of that law that are appropriate for the purposes of that section. General modifications (2) A reference in the applied law to a thing or person described in column 2 of an item of the table includes a reference to a thing or person described in column 3 of the item. General modifications Column 1 Item Column 2 A reference in the applied law to: Column 3 Includes a reference to: 1 A body corporate The trust or trustee (as appropriate) 2 A dividend A distribution from the trust, so far as the distribution is from profits 3 A share capital account The amount of the trust estate that is not attributable to profits 4 A director (of a company, body corporate or corporation) The trustee or, if the trustee is a body corporate, a director of the trustee (as appropriate) Note: An expression in column 2 of an item of the table has the meaning that the expression has in the provision of the applied law containing the reference. (3) The trust is not covered by a reference in the applied law to a trust. Note: Subsections (3) and (4) of this section do not affect an entity’s liability for criminal, civil and administrative penalties under the applied law, as those subsections modify (so far as appropriate) the applied law as it applies because of subsection 713 ‑ 135(1), and that subsection does not affect liability for such penalties (see subsection 713 ‑ 135(3)). (4) The trustee is not covered by a reference in the applied law to a trustee (except a reference in section 254 of the Income Tax Assessment Act 1936 ). Note: Section 254 of the Income Tax Assessment Act 1936 deals with obligations and liabilities of trustees. Modifications of specific provisions (5) A provision of an Act identified in an item of the table is modified as set out in the item. Modifications of specific provisions Item Act(s) Provision Modification 3 Income Tax Assessment Act 1997 Division 83A The Division does not apply in relation to an * ESS interest acquired under an * employee share scheme before the day specified in the choice if the Division did not apply in relation to the interest before that day. 4 Income Tax Assessment Act 1997 and Income Tax (Transitional Provisions) Act 1997 Part 3 ‑ 90 (of each Act) The Part has effect as if an entity were a * wholly ‑ owned subsidiary of the trust if the entity would have been one had the trustee owned beneficially * membership interests in the entity that the trustee owned legally.

Amendment history: Inserted by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 133 of 2009, effective Schedule 1 (items 1, 21–76, 86, 87): 14 Dec 2009 Schedule 2 (items 1–13, 15) and Schedule 3 (items 28–40, 44, 45): Royal Assent | Amended by No 23 of 2018, effective Sch 1 (items 12–19, 21–23, 60–62), Sch 2 (items 1, 2, 6) and Sch 5 (items 7–11, 26–28): 1 Apr 2018 (s 2(1) items 3, 5, 8, 10, 12) Sch 1 (items 75–79): 30 Mar 2018 (s 2(1) item 9)

s 713-200 — What this Subdivision is about

This Subdivision modifies tax cost setting rules in Divisions 701, 705 and 711 so that they take account of the special characteristics of partnerships. The modifications apply in these situations: (a) an entity that is a partner in a partnership becomes a subsidiary member of a consolidated group; (b) a partnership becomes, or ceases to be, a subsidiary member of a consolidated group. Table of sections Objects 713 ‑ 205 Objects of this Subdivision Partnership cost setting interests etc. 713 ‑ 210 Partnership cost setting interests 713 ‑ 215 Terminating value for partnership cost setting interest Setting tax cost of partnership cost setting interests 713 ‑ 220 Set tax cost of partnership cost setting interests if partner joins consolidated group 713 ‑ 225 Tax cost setting amount for partnership cost setting interest Special rules where partnership joins consolidated group 713 ‑ 235 Partnership joins group—set tax cost of partnership assets 713 ‑ 240 Partnership joins group—tax cost setting amount for partnership asset Special rules where partnership leaves consolidated group 713 ‑ 250 Partnership leaves group—standard provisions modified 713 ‑ 255 Partnership leaves group—tax cost setting amount for partnership cost setting interests 713 ‑ 260 Partnership leaves group—tax cost setting amount for assets consisting of being owed certain liabilities 713 ‑ 265 Partnership leaves group—adjustments to allocable cost amount of partner who also leaves group

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1)) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23)

s 713-205 — Objects of this Subdivision

(1) The first object of this Subdivision is to ensure that if: (a) an entity that is a partner in a partnership becomes a * subsidiary member of a * consolidated group; and (b) the partnership does not become a * subsidiary member of the group; the provisions mentioned in subsection (3) operate as if the * partnership cost setting interests of the entity in the partnership were the entity’s only assets relating to the partnership. Note: In general, the head company of the consolidated group is treated as a partner in the partnership, in accordance with section 701 ‑ 1 (the single entity rule). (2) The second object of this Subdivision is to ensure that where a partnership becomes a * subsidiary member of a * consolidated group, the provisions mentioned in subsection (3) operate: (a) as if the group became the holder of the assets of the partnership; and (b) to set the * tax cost of the assets of the partnership at an appropriate amount, taking into account the taxation treatment of partnerships. Note: While the partnership is a subsidiary member of the group, it loses its separate tax identity (under the single entity rule in subsection 701 ‑ 1(1)). Therefore, in general, the assets of the partnership are treated as assets of the head company of the group and partnership cost setting interests in the partnership are ignored. (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. (4) The third object of this Subdivision is to ensure that, where a partnership ceases to be a * subsidiary member of a * consolidated group, the provisions mentioned in subsection (5) operate: (a) as if the group’s * partnership cost setting interests were the group’s only assets relating to the partnership; and (b) to set the * tax cost of those interests at an appropriate amount, taking into account the fact that the group ceases to be the holder of the assets of the partnership. (5) The provisions are: (a) sections 701 ‑ 15 and 701 ‑ 50 (about setting the tax cost of membership interests in an entity that leaves the group); and (b) sections 701 ‑ 20 and 701 ‑ 45 (about the cost of assets consisting of certain liabilities owed by or to an entity that leaves the group); and (c) Division 711.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1)) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23)

s 713-210 — Partnership cost setting interests

A partnership cost setting interest in a partnership is the asset that is comprised of: (a) an interest in an asset of the partnership; or (b) an interest in the partnership that is not covered by paragraph (a); but does not include an asset that is comprised of a * membership interest in the partnership. Note 1: A partner may have more than one partnership cost setting interest that relates to an asset of the partnership (see section 106 ‑ 5). Note 2: A partnership cost setting interest may relate to an asset of the partnership, but the asset of the partnership is not a partnership cost setting interest in the partnership.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1))

s 713-215 — Terminating value for partnership cost setting interest

(1) This section modifies the way in which the * terminating value of a * partnership cost setting interest in a partnership is worked out under section 705 ‑ 30. (2) For the purposes of this Subdivision, the * terminating value of the * partnership cost setting interest at a time is: (a) if the interest relates to an asset of the partnership—the interest’s individual share of the terminating value of that asset (worked out in accordance with subsection (3)) at that time; or (b) otherwise—the terminating value of the interest at that time worked out under section 705 ‑ 30. (3) To work out the amount of the * terminating value of the asset of the partnership mentioned in paragraph (2)(a), apply section 705 ‑ 30 as if: (a) the time mentioned in subsection (2) were the joining time mentioned in that section; and (b) the partnership were, at the time mentioned in subsection (2), the joining entity mentioned in that section.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1))

s 713-220 — Set tax cost of partnership cost setting interests if partner joins consolidated group

(1) This section applies if an entity (the joining entity ) that is a partner in a partnership becomes a * subsidiary member of a * consolidated group at a time (the joining time ). Note: If the partnership becomes a subsidiary member of the group at the joining time, the application of this section is affected by section 713 ‑ 235. (2) In applying the provisions mentioned in subsection 713 ‑ 205(3) in relation to the joining entity: (a) work out the * tax cost setting amount for each * partnership cost setting interest in the partnership that the joining entity holds at the joining time, in accordance with section 713 ‑ 225; and (b) except for the purposes of section 713 ‑ 235 (which applies only if the partnership joins the group), do not work out tax cost setting amounts for the assets of the partnership; and (c) do not work out tax cost setting amounts for the * membership interests in the partnership held by the joining entity. Note 1: Because of paragraphs (b) and (c), no amount of allocable cost amount for the joining entity is allocated to the assets of the partnership, or to membership interests in the partnership held by the joining entity. Note 2: If assets of the partnership are held on revenue account, the related partnership cost setting interests held by the joining entity have their tax cost set at the joining time. However, that tax cost does not alter calculations of the net income or exempt income of the partnership, or of a partnership loss, for the purposes of section 92 of the Income Tax Assessment Act 1936 .

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1))

s 713-225 — Tax cost setting amount for partnership cost setting interest

(1) This section modifies the way in which the * tax cost setting amounts are worked out under Division 705 for the * partnership cost setting interests mentioned in paragraph 713 ‑ 220(2)(a). Partnership cost setting interest takes character of partnership asset—general (2) Work out the * tax cost setting amounts for those * partnership cost setting interests as if any partnership cost setting interest that relates to an asset (the underlying partnership asset ) of the partnership were an asset of the same kind as the underlying partnership asset. Note: The kinds of assets mentioned in subsection (2) include the following: (a) retained cost base assets; (b) reset cost base assets that are held on revenue account (however, if such assets are trading stock or depreciating assets, the special rule in subsection (4) will apply) or on capital account; (c) excluded assets (see subsection (3)); (d) current assets (within the meaning of subsection 705 ‑ 125(2)). Example: The partnership has an asset that is Australian currency (which is a retained cost base asset). A partnership cost setting interest of the joining entity in that asset is treated as a retained cost base asset for the purpose of working out the tax cost setting amounts for the joining entity’s partnership cost setting interests in the partnership. Partnership cost setting interest takes character of partnership asset—excluded assets (3) If: (a) tax cost setting amounts were to be worked out for the assets of the partnership under Division 705; and (b) in working out those amounts, the underlying partnership asset mentioned in subsection (2) would be an excluded asset for the purposes of section 705 ‑ 35; then subsection (2) operates so that the * tax cost setting amounts for those * partnership cost setting interests are worked out as if any partnership cost setting interest that relates to the underlying partnership asset were an excluded asset for the purposes of section 705 ‑ 35. Special character of partnership cost setting interest in partnership asset that is trading stock, a depreciating asset or a registered emissions unit (4) Despite subsection (2), if an asset of the partnership is * trading stock, a * depreciating asset or a * registered emissions unit, work out the * tax cost setting amounts for those * partnership cost setting interests as if: (a) a partnership cost setting interest relating to that asset were a * retained cost base asset; and (b) the tax cost setting amount for that partnership cost setting interest were equal to its * terminating value (worked out in accordance with section 713 ‑ 215). Partnership liabilities—working out allocable cost amount (6) If: (a) in accordance with the * accounting principles that the partnership would use if it were to prepare its financial statements just before the joining time, a thing (the partnership liability ) is a liability of the partnership at the joining time; and (b) for that reason, the partnership liability is not an accounting liability of the joining entity at the joining time for the purposes of section 705 ‑ 70; then sections 705 ‑ 70, 705 ‑ 75 and 705 ‑ 80 operate as if the partnership liability were an accounting liability of the joining entity at the joining time, to the extent of the joining entity’s individual share of the partnership liability. Partnership deductions—working out allocable cost amount (7) Section 705 ‑ 115 operates as if: (a) a deduction to which the partnership is entitled (the partnership deduction ) were a deduction to which the joining entity was entitled, to the extent of the joining entity’s individual share of the partnership deduction; and (b) the deduction to which the joining entity was entitled were of the same kind as the partnership deduction. Note: These kinds of deductions include acquired deductions and owned deductions (within the meaning of section 705 ‑ 115).

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1)) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 143 of 2007, effective Schedule 1 (items 1, 4, 128–194, 222, 223, 225, 226), Schedule 2, Schedule 5 (items 1–16, 48(1)–(3)), Schedule 6 and Schedule 7 (items 18–68): Royal Assent Schedule 5 (items 31–46): 15 Mar 2007 (s 2(1) item 6) | Amended by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B) | Amended by No 132 of 2011, effective Sch 2 (items 4–71): 2 Apr 2012 (s 2(1) item 5) Sch 2 (items 74–77): never commenced (s 2(1) item 6 (rep by 83, 2014, Sch 3 item 1))

s 713-235 — Partnership joins group—set tax cost of partnership assets

(1) This section applies if a partnership becomes a * subsidiary member of a * consolidated group at a time (the joining time ). (2) In applying the provisions mentioned in subsection 713 ‑ 205(3) in relation to the partnership: (a) do not work out an allocable cost amount for the partnership; and (b) work out the * tax cost setting amount for each asset of the partnership covered by subsection (3), in accordance with section 713 ‑ 240. Note: If a partner in the partnership becomes a subsidiary member of the group at the joining time, tax cost setting amounts are worked out for the assets of the partner (including partnership cost setting interests) before tax cost setting amounts are worked out for the assets of the partnership. (3) An asset of the partnership at the joining time is covered by this subsection, unless it would be an excluded asset for the purposes of section 705 ‑ 35 on the assumption that tax cost setting amounts were worked out for the assets of the partnership under Division 705 (instead of section 713 ‑ 240).

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1))

s 713-240 — Partnership joins group—tax cost setting amount for partnership asset

(1) Work out the * tax cost setting amounts for the assets covered by subsection 713 ‑ 235(3) as follows: (a) firstly, add up the subsection (2) amounts for all the partnership cost setting interests in the partnership at the joining time (the result is the partnership cost pool ); Note 1: Partnership cost setting interests held by a partner that becomes a subsidiary member of the group at the joining time are included in the calculation in paragraph (a). The operation of the cost setting rules in relation to that partner at the joining time may affect the subsection (2) amounts for those interests. Note 2: Partnership cost setting interests are included in the calculation in paragraph (a), even if the cost setting rules have not applied in relation to the interests (for example, if the interests were acquired directly by the head company). (b) secondly, work out the tax cost setting amounts for the assets covered by subsection 713 ‑ 235(3) that are * retained cost base assets, in accordance with section 705 ‑ 25; (c) thirdly, work out the tax cost setting amounts for the rest of the assets covered by subsection 713 ‑ 235(3), in accordance with subsection (3). Subsection (2) amount for a partnership cost setting interest (2) For the purposes of paragraph (1)(a), the subsection (2) amount for a * partnership cost setting interest is the amount specified in the following table: Working out the subsection (2) amount Item If the market value of the partnership cost setting interest is ... the subsection (2) amount for the partnership cost setting interest is ... 1 equal to or greater than its * cost base its cost base 2 less than its * cost base but greater than its * reduced cost base its * market value 3 less than or equal to its * reduced cost base its reduced cost base Allocating partnership cost pool to partnership assets that are not retained cost base assets (3) Work out the * tax cost setting amounts for the assets mentioned in paragraph (1)(c) by applying sections 705 ‑ 35 , 705 ‑ 40, 705 ‑ 45 and 705 ‑ 47 to those assets, as if: (a) the partnership were, at the joining time, the joining entity mentioned in those sections; and (b) the assets of the partnership were the assets covered by subsection 713 ‑ 235(3); and (c) the allocable cost amount mentioned in paragraph 705 ‑ 35(1)(a) were the partnership cost pool. (4) For the purposes of this section, section 104 ‑ 510 (CGT event L3) applies as if the group’s allocable cost amount for the entity mentioned in that section were the partnership cost pool.

Amendment history: Inserted by No 67 of 2003, effective Schedule 10 (items 13–16): 14 Oct 2003 ( see s. 2(1)) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23)

s 713-250 — Partnership leaves group—standard provisions modified

(1) This section applies if a partnership ceases to be a * subsidiary member of a * consolidated group at a time (the leaving time ). Note: The section applies whether or not any partner that is a subsidiary member of the group also ceases to be a subsidiary member at the leaving time. (2) Apply the provisions mentioned in subsection 713 ‑ 205(5) subject to the modifications in the provisions that follow under this * group heading.

Amendment history: Inserted by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23)

s 713-255 — Partnership leaves group—tax cost setting amount for partnership cost setting interests

Overview (1) Instead of working out * tax cost setting amounts for * membership interests in the partnership, a special rule requires * partnership cost setting interests in the partnership to be worked out. Where other entities cease to be * subsidiary members at the same time, the normal tax cost setting amount rules are applied for membership interests in the other entities, but the special rule is applied for partnership cost setting interests in the partnership. Tax cost setting amounts for membership interests in partnership not to be worked out (2) Do not work out * tax cost setting amounts for * membership interests in the partnership. Partnership is only entity that exits—tax cost setting amount for partnership cost setting interests (3) Except where the partnership ceases to be a * subsidiary member in circumstances covered by subsection (5), work out in accordance with subsection (4) the * tax cost setting amount just before the leaving time for each * partnership cost setting interest in the partnership held by a partner that is a * member of the group just before the leaving time. Tax cost setting amount (4) The * tax cost setting amount is equal to the partner’s individual share of the * terminating value of the partnership asset to which the * partnership cost setting interest relates. Note: For income tax purposes there is no disposal by the head company of any assets of the partnership when it ceases to be a subsidiary member of the group. Multiple exit case—tax cost setting amounts for both partnership cost setting interests in partnership and membership interests in other entities (5) If the partnership is one of 2 or more entities that cease to be * subsidiary members of the old group at the same time because of an event happening in relation to one of them, apply section 711 ‑ 55 as if: (a) except in paragraph 711 ‑ 55(3)(a), a reference to * membership interests in an entity, or to the * tax cost setting amount for such interests, where the entity is the partnership, were a reference to * partnership cost setting interests in the partnership, or to the tax cost setting amount for such interests; and (b) paragraph 711 ‑ 55(3)(a) were replaced by a requirement that, where the entity in which the membership interests mentioned in subsection 711 ‑ 55(3) are held is the partnership, subsection (4) of this section is to be applied in working out the tax cost setting amount of the partnership cost setting interests in the partnership.

Amendment history: Inserted by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23)

s 713-260 — Partnership leaves group—tax cost setting amount for assets consisting of being owed certain liabilities

(1) This section applies if: (a) when the partnership ceases to be a * subsidiary member of the group, a partner remains a * member of the group; and (b) an asset becomes an asset of the * head company because subsection 701 ‑ 1(1) (the single entity rule) ceases to apply to the partnership when it ceases to be a subsidiary member; and (c) the asset is, ignoring that subsection: (i) the partner’s interest in an asset of the partnership consisting of a liability of a member of the group owed to the partnership; or (ii) the partner’s share of a liability of the partnership owed to a member of the group. (2) The asset’s * tax cost is set at the leaving time at a * tax cost setting amount equal to the * market value of the asset.

Amendment history: Inserted by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23)

s 713-265 — Partnership leaves group—adjustments to allocable cost amount of partner who also leaves group

(1) This section has effect in working out the group’s * allocable cost amount for a partner in the partnership, if the partner ceases to be a * subsidiary member of the group at the leaving time. (2) Section 711 ‑ 35 operates as if: (a) a deduction to which the partnership becomes entitled (the partnership deduction ) were a deduction to which the partner becomes entitled, to the extent of the partner’s individual share of the partnership deduction; and (b) the deduction to which the partner becomes entitled were of the same kind as the partnership deduction. Note: These kinds of deductions include acquired deductions and owned deductions (within the meaning of section 711 ‑ 35). (3) Section 711 ‑ 40 operates as if a liability owed by * members of the group to the partnership at the leaving time were a liability owed by members of the group to the partner at that time, to the extent of the partner’s individual share of the liability. (4) If: (a) in accordance with the * accounting principles that the partnership would use if it were to prepare its financial statements just before the leaving time (disregarding subsection 701 ‑ 1(1) (the single entity rule)), a thing (the partnership liability ) is a liability of the partnership just before the leaving time; and (b) for that reason, the partnership liability is not an accounting liability of the partner just before the leaving time for the purposes of section 711 ‑ 45; then section 711 ‑ 45 operates as if the partnership liability were an accounting liability of the partner just before the leaving time, to the extent of the partner’s individual share of the partnership liability.

Amendment history: Inserted by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B) | Amended by No 12 of 2012, effective s 4, Sch 2 (items 1–23), Sch 5 and Sch 6 (items 3–6, 11–20, 25, 26, 35–67, 74–83, 94–96, 117–142, 157–178, 183, 200–203, 214–217, 235–240, 248): 21 Mar 2012 (s 2(1) items 1, 3, 5, 6, 10, 14, 18, 19, 27, 31) Sch 6 (item 7): 1 July 2007 (s 2(1) item 7) Sch 6 (item 10): 1 July 2010 (s 2(1) item 9) Sch 6 (items 106–116): 22 Mar 2012 (s 2(1) items 16, 17) Sch 6 (item 143): 22 Jan 2013 (s 2(1) item 20) Sch 6 (items 146–148): never commenced (s 2(1) item 23) Sch 6 (items 179, 181): 3 Oct 2008 (s 2(1) items 28, 30) Sch 6 (item 180): 3 June 2010 (s 2(1) item 29)

s 713-500 — What this Subdivision is about

This Subdivision sets out special rules for: (a) a life insurance company that becomes, or ceases to be, a member of a consolidated group; and (b) the head company of a consolidated group where a life insurance company is a subsidiary member of the group. Table of sections General modifications for life insurance companies 713 ‑ 505 Head company treated as a life insurance company 713 ‑ 510 Certain subsidiaries of life insurance companies cannot be members of consolidated group 713 ‑ 510A Disregard single entity rule in working out certain amounts in respect of life insurance company Life insurance companies’ liabilities on joining consolidated group 713 ‑ 511 Treatment of certain liabilities for income year when life insurance company joins consolidated group Tax cost setting rules for life insurance companies joining consolidated group 713 ‑ 515 Certain assets taken to be retained cost base assets where life insurance company joins group 713 ‑ 520 Valuing certain liabilities where life insurance company joins group 713 ‑ 525 Obligation to value certain assets and liabilities at joining time Losses of life insurance companies joining consolidated group 713 ‑ 530 Treatment of certain losses of life insurance company Losses of life insurance companies’ subsidiaries joining consolidated group 713 ‑ 535 Losses of entities whose membership interests are complying superannuation assets of life insurance company 713 ‑ 540 Losses of entities whose membership interests are segregated exempt assets of life insurance company Imputation rules for life insurance companies joining consolidated group 713 ‑ 545 Treatment of franking surplus in franking account of life insurance subsidiary joining group 713 ‑ 550 Treatment of head company’s franking account after joining Liabilities for life insurance companies leaving consolidated group 713 ‑ 565 Treatment of certain liabilities for income year when life insurance company leaves consolidated group Losses for life insurance companies leaving consolidated group 713 ‑ 570 Certain losses transferred to leaving company Tax cost setting rules for life insurance companies leaving consolidated group 713 ‑ 575 Terminating value of certain assets where life insurance company leaves group 713 ‑ 580 Valuing certain liabilities where life insurance company leaves group 713 ‑ 585 Obligation to value certain assets and liabilities at leaving time

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 713-505 — Head company treated as a life insurance company

This Act, and the Income Tax Rates Act 1986 , apply to the * head company of a * consolidated group as if it were a * life insurance company for an income year if one or more life insurance companies are * subsidiary members of the group at any time during that year.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 713-510 — Certain subsidiaries of life insurance companies cannot be members of consolidated group

(1) An entity cannot be a * subsidiary member of a * consolidated group or * consolidatable group of which a * life insurance company is a * member if: (a) the life insurance company owns, either directly or indirectly through one or more interposed entities, all the * membership interests in the entity and either: (i) some, but not all, of the membership interests described in subsection (3) (the key interests ) are * complying superannuation assets of the life insurance company; or (ii) some, but not all, of the key interests are * segregated exempt assets of the life insurance company; or (b) the life insurance company owns, either directly or indirectly through one or more interposed entities, only some of the membership interests in the entity and any of the key interests are complying superannuation assets or segregated exempt assets of the life insurance company. Note: The entity could, however, be a member of another consolidated group or consolidatable group. (2) An entity cannot continue to be a * subsidiary member of a * consolidated group of which a * life insurance company is a * member if: (a) the life insurance company owns, either directly or indirectly through one or more interposed entities, all the * membership interests in the entity and, had the entity not been a subsidiary member of the group, either: (i) some, but not all, of the membership interests described in subsection (3) (the key interests ) would be * complying superannuation assets of the life insurance company; or (ii) some, but not all, of the key interests would be * segregated exempt assets of the life insurance company; or (b) the life insurance company owns, either directly or indirectly through one or more interposed entities, only some of the membership interests in the entity and, had the entity not been a subsidiary member of the group, any of the key interests would be complying superannuation assets or segregated exempt assets of the life insurance company. (3) The key interests are the * membership interests the * life insurance company owns directly in: (a) the entity; or (b) an interposed entity.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Repealed and substituted by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 45 of 2008, effective 26 June 2008 | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015

s 713-510A — Disregard single entity rule in working out certain amounts in respect of life insurance company

(1) This section applies if a * life insurance company is a * member of a * consolidated group. (2) However, if the * life insurance company is a * subsidiary member of the group, this section does not apply: (a) for the purposes of working out the * tax cost setting amount of an asset of the life insurance company when it becomes a subsidiary member of the group; and (b) for the purposes of working out the tax cost setting amount of a * membership interest in the life insurance company if it ceases to be a subsidiary member of the group. (3) Disregard section 701 ‑ 1 (the single entity rule) in working out any of the following for the purposes of Division 320 in relation to the * life insurance company: (a) amounts of the * head company’s ordinary income and statutory income derived from * segregated exempt assets that are not assessable income and are not * exempt income under paragraph 320 ‑ 37(1)(a); (b) the head company’s taxable income of the * complying superannuation class (see section 320 ‑ 137); (c) the head company’s * tax loss of the complying superannuation class (see section 320 ‑ 141); (d) the total * transfer value of the head company’s * complying superannuation assets (see paragraph 320 ‑ 175(1)(a)); (e) the amount of the head company’s * complying superannuation liabilities (see paragraph 320 ‑ 175(1)(b)); (f) the total transfer value of the head company’s segregated exempt assets (see paragraph 320 ‑ 230(1)(a)); (g) the amount of the head company’s * exempt life insurance policy liabilities (see paragraph 320 ‑ 230(1)(b)).

Amendment history: Inserted by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B) | Amended by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B) | Amended by No 41 of 2011, effective Schedule 1 (items 1–3): 1 Jan 2011 Schedule 1 (items 4–6) and Schedule 5 (items 25–29, 33, 36–50, 74–78, 80–145, 148–167, 173–175, 383–396, 400, 414–418): Royal Assent Schedule 5 (items 9, 18–20): 28 June 2011 Schedule 5 (items 51–54): 1 July 2011 | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015

s 713-511 — Treatment of certain liabilities for income year when life insurance company joins consolidated group

(1) This section affects how paragraph 320 ‑ 15(1)(h) and section 320 ‑ 85 apply if: (a) a * life insurance company becomes a * subsidiary member of a * consolidated group at a time (the joining time ); and (b) just before the joining time, the life insurance company had one or more liabilities under the * net risk components of life insurance policies. Note: Paragraph 320 ‑ 15(1)(h) and section 320 ‑ 85 both operate on the basis of a comparison of the value of the company’s liabilities under the net risk components of life insurance policies at the end of the current year with the value of those liabilities at the end of the previous year, so that: (a) that paragraph includes an amount in the company’s assessable income for the current year if the value at the end of the current year is less than the value at the end of the previous income year; and (b) that section allows a deduction for the current year if the value at the end of the current year is more than the value at the end of the previous income year. (2) The object of this section is to ensure that the * head company of the * consolidated group bears the income tax consequences relating to a change in * value of the liabilities only after the joining time. Note: The life insurance company bears the income tax consequences relating to a change in value of the liabilities before the joining time, because section 701 ‑ 30 ensures that paragraph 320 ‑ 15(1)(h) and section 320 ‑ 85 apply in relation to a part of the income year before that time when the company was not a subsidiary member of a consolidated group as if that part were an income year. (3) Paragraph 320 ‑ 15(1)(h) and section 320 ‑ 85 apply for the head company core purposes set out in section 701 ‑ 1 (Single entity rule) as if the * value of the liabilities at the end of the last income year ending before the joining time were the value of the liabilities (for the * life insurance company) just before the joining time.

Amendment history: Inserted by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16)

s 713-515 — Certain assets taken to be retained cost base assets where life insurance company joins group

(1) If an entity that becomes a * subsidiary member of a * consolidated group at a time (the joining time ) is a * life insurance company, these assets are retained cost base assets : (a) a * complying superannuation asset, or a * segregated exempt asset, of the company; and (b) another asset of the company that is held by the company for the purpose of discharging its liabilities under the * net investment component of ordinary life insurance policies (except policies that provide for * participating benefits or * discretionary benefits under * life insurance business carried on in Australia); and (c) for a life insurance company that has demutualised under Division 9AA of Part III of the Income Tax Assessment Act 1936 where, in the period starting just after the company demutualises and ending at the joining time, all of the * membership interests in the company were owned by the same group—a goodwill asset of the company. (2) If the * retained cost base asset is covered by paragraph (1)(a) or (b), its * tax cost setting amount is: (a) for the purposes of working out the tax cost setting amounts for reset cost base assets (see section 705 ‑ 35)—the asset’s * transfer value just before the joining time; and (b) for all other purposes—the asset’s * terminating value. (3) If the * retained cost base asset is covered by paragraph (1)(c), its * tax cost setting amount is the embedded value (see subsection 121AM(1) of the Income Tax Assessment Act 1936 ) on the applicable accounting day (see subsection 121AM(3) of that Act) of the * life insurance company concerned reduced by the net value of shareholders’ assets held by the company on that day. (4) The net investment component of ordinary life insurance policies is the component of * life insurance policies (except * exempt life insurance policies and * complying superannuation life insurance policies) that: (a) is the component in respect of the part of those policies that has not been reinsured under a * contract of reinsurance; and (b) is not the * net risk component of those policies.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 45 of 2008, effective 26 June 2008 | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015

s 713-520 — Valuing certain liabilities where life insurance company joins group

(1) Despite section 705 ‑ 70, if the joining entity mentioned in step 2 in the table in section 705 ‑ 60 is a * life insurance company, the joining entity’s liabilities mentioned in this section are to be valued as mentioned in this section. (2) The value of the joining entity’s * complying superannuation liabilities (if any) is the amount worked out under section 320 ‑ 190 at the joining time. (3) The value of the joining entity’s * exempt life insurance policy liabilities (if any) is the amount worked out under section 320 ‑ 245 at the joining time. (4) Subsection (5) applies to a liability of the joining entity if: (a) the liability is under the * net risk component of a * life insurance policy; and (b) the joining entity could deduct under section 320 ‑ 80 an amount for the * risk component of claims paid under the policy had it not become a * member of the * consolidated group. (5) The value of that liability is the * current termination value of the * net risk component of the * life insurance policy at the joining time (calculated by an * actuary). (6) The value of the joining entity’s liabilities under the * net investment component of ordinary life insurance policies is the amount worked out for those liabilities under subsection 320 ‑ 190(2) as if those liabilities were * complying superannuation liabilities.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 45 of 2008, effective 26 June 2008 | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015

s 713-525 — Obligation to value certain assets and liabilities at joining time

Division 320 has effect as if the time when a * life insurance company becomes a * subsidiary member of a * consolidated group were a * valuation time for the purposes of sections 320 ‑ 175 and 320 ‑ 230. Note: This means that there must be a valuation of the complying superannuation assets and complying superannuation liabilities under section 320 ‑ 175 (with the consequences set out in section 320 ‑ 180), and a valuation of the segregated exempt assets and exempt life insurance policy liabilities under section 320 ‑ 230 (with the consequences set out in section 320 ‑ 235), as at that time.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Repealed and substituted by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Repealed and substituted by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Repealed and substituted by No 45 of 2008, effective 26 June 2008 | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015

s 713-530 — Treatment of certain losses of life insurance company

(1) This section applies if: (a) a * life insurance company becomes a * member of a * consolidated group at a time (the joining time ); and (b) just before the joining time, the life insurance company had either: (i) a * tax loss of the * complying superannuation class; or (ii) a * net capital loss from * complying superannuation assets. (2) This Act operates (except so far as the contrary intention appears) for the purposes of income years ending after the joining time as if: (a) the * head company of the * consolidated group had made the loss for the income year in which the joining time occurs; and (b) the * life insurance company had not made the loss for the income year for which it made the loss. (3) The * head company is not prevented from * utilising the loss for the income year in which the joining time occurs merely because this Act operates as if the head company had made the loss for that year. (4) Division 707 does not apply in relation to the * net capital loss or the * tax loss at the joining time.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Repealed and substituted by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 45 of 2008, effective 26 June 2008 | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015

s 713-535 — Losses of entities whose membership interests are complying superannuation assets of life insurance company

(1) This section applies if: (a) a * life insurance company becomes a * member of a * consolidated group at a time (the joining time ); and (b) at the joining time, the life insurance company owns, either directly or indirectly through one or more interposed entities, all the * membership interests in yet another entity (the life insurance subsidiary ) that becomes a * subsidiary member of the group at that time; and (c) all the following membership interests are * complying superannuation assets of the life insurance company: (i) the membership interests (if any) that the life insurance company owns directly in the life insurance subsidiary; (ii) the membership interests (if any) that the life insurance company owns directly in the interposed entities; and (d) the * head company of the group makes a * tax loss or * net capital loss under Subdivision 707 ‑ A because of a transfer from the life insurance subsidiary. (2) This Act operates for the purposes of income years ending after the transfer as if: (a) the * tax loss were of the * complying superannuation class; or (b) the * net capital loss were from * complying superannuation assets. (3) Subdivisions 707 ‑ B, 707 ‑ C and 707 ‑ D do not affect the * utilisation of the loss by the * head company of the * consolidated group.

Amendment history: Inserted by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 45 of 2008, effective 26 June 2008 | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015

s 713-540 — Losses of entities whose membership interests are segregated exempt assets of life insurance company

(1) This section applies if: (a) a * life insurance company becomes a * member of a * consolidated group at a time (the joining time ); and (b) at the joining time, the life insurance company owns, either directly or indirectly through one or more interposed entities, all the * membership interests in yet another entity (the life insurance subsidiary ) that becomes a * subsidiary member of the group at that time; and (c) all the following membership interests are * segregated exempt assets of the life insurance company: (i) the membership interests (if any) that the life insurance company owns directly in the life insurance subsidiary; (ii) the membership interests (if any) that the life insurance company owns directly in the interposed entities. (2) A * tax loss or * net capital loss of the life insurance subsidiary for an income year ending before the joining time cannot be * utilised by the life insurance subsidiary for an income year ending after that time. Note: This prevents the loss from being transferred to the head company of the consolidated group under Subdivision 707 ‑ A (because it means the life insurance subsidiary could not have utilised the loss for the trial year). As a result, section 707 ‑ 150 prevents any other entity from utilising the loss for an income year ending after the joining time.

Amendment history: Inserted by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16)

s 713-545 — Treatment of franking surplus in franking account of life insurance subsidiary joining group

(1) This section applies if: (a) a * life insurance company becomes a * member of a * consolidated group at a time (the joining time ); and (b) at the joining time, the life insurance company owns, either directly or indirectly through one or more interposed entities, * membership interests in yet another entity (the life insurance subsidiary ) that becomes a * subsidiary member of the group at that time; and (c) the life insurance subsidiary’s * franking account is in surplus just before the joining time. (2) Paragraph 709 ‑ 60(2)(b) does not apply in relation to the life insurance subsidiary. (3) A * franking credit arises at the joining time in the * franking account of the * head company of the group. The amount of the credit is the amount worked out under subsection (4). (4) The amount is equal to the amount of the * franking credit that would arise in the * life insurance company’s * franking account just before the joining time under item 5 of the table in subsection 219 ‑ 15(2) if: (a) the life insurance subsidiary made a * franked distribution to the life insurance company just before the joining time; and (b) the amount of the franking credit on the distribution were equal to the surplus mentioned in paragraph (1)(c). (5) The * head company of the group is entitled to a * tax offset for the income year in which the joining time occurs. The amount of the tax offset is: (a) if all the * membership interests (if any) that the * life insurance company owns directly in the life insurance subsidiary, and all the membership interests (if any) that the life insurance company owns directly in interposed entities, are * segregated exempt assets of the life insurance company—the surplus mentioned in paragraph (1)(c), reduced by the amount worked out under subsection (4); or (b) if all the membership interests (if any) that the life insurance company owns directly in the life insurance subsidiary, and all the membership interests (if any) that the life insurance company owns directly in interposed entities, are * complying superannuation assets of the life insurance company—the amount worked out under subsection (6); or (c) otherwise—nil. (6) The amount is worked out using the following formula (or is nil if it would otherwise be negative): where: complying superannuation class tax rate means the rate of tax in respect of the * complying superannuation class of the taxable income of a * life insurance company for the income year in which the joining time occurs (see paragraph 23A(b) of the Income Tax Rates Act 1986 ). ordinary class tax rate means the rate of tax in respect of the * ordinary class of the taxable income of a life insurance company for the income year in which the joining time occurs (see paragraph 23A(a) of the Income Tax Rates Act 1986 ).

Amendment history: Inserted by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 143 of 2007, effective Schedule 1 (items 1, 4, 128–194, 222, 223, 225, 226), Schedule 2, Schedule 5 (items 1–16, 48(1)–(3)), Schedule 6 and Schedule 7 (items 18–68): Royal Assent Schedule 5 (items 31–46): 15 Mar 2007 (s 2(1) item 6) | Amended by No 45 of 2008, effective 26 June 2008 | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015

s 713-550 — Treatment of head company’s franking account after joining

Sections 709 ‑ 70 and 709 ‑ 75 do not apply in relation to a * subsidiary member of a * consolidated group if: (a) the subsidiary member is a * life insurance company; or (b) a life insurance company that is a * member of the group owns * membership interests, either directly or indirectly through one or more interposed entities, in the subsidiary member.

Amendment history: Inserted by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16)

s 713-565 — Treatment of certain liabilities for income year when life insurance company leaves consolidated group

(1) This section affects how paragraph 320 ‑ 15(1)(h) and section 320 ‑ 85 apply if: (a) a * life insurance company ceases to be a * subsidiary member of a * consolidated group at a time (the leaving time ); and (b) at the leaving time, the * life insurance company has one or more liabilities under the * net risk components of life insurance policies. Note: Paragraph 320 ‑ 15(1)(h) and section 320 ‑ 85 both operate on the basis of a comparison of the value of a life insurance company’s liabilities under the net risk components of life insurance policies at the end of the current year with the value of those liabilities at the end of the previous year, so that: (a) that paragraph includes an amount in the company’s assessable income for the current year if the value at the end of the current year is less than the value at the end of the previous income year; and (b) that section allows a deduction for the current year if the value at the end of the current year is more than the value at the end of the previous income year. (2) The object of this section is to ensure that: (a) the * head company of the * consolidated group bears the income tax consequences relating to a change in * value of the liabilities before the leaving time; and (b) the * life insurance company bears the income tax consequences relating to a change in value of the liabilities after the leaving time. Head company’s income or deduction from liabilities (3) For the head company core purposes set out in section 701 ‑ 1 (Single entity rule) relating to the income year in which the leaving time occurs (but not later income years), paragraph 320 ‑ 15(1)(h) and section 320 ‑ 85 have effect as if: (a) the * head company of the * consolidated group had the liabilities at the end of that income year; and (b) the * value of the liabilities at the end of that income year had been the amount that was actually the value of the liabilities (for the * life insurance company) at the leaving time. Life insurance company’s income or deduction from liabilities (4) For the entity core purposes set out in section 701 ‑ 1 (Single entity rule) relating to the * life insurance company and the income year in which the leaving time occurs, paragraph 320 ‑ 15(1)(h) and section 320 ‑ 85 have effect as if the * value of the liabilities at the end of the previous income year had been the amount that was actually the value of the liabilities (for the life insurance company) at the leaving time.

Amendment history: Inserted by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16)

s 713-570 — Certain losses transferred to leaving company

(1) This section applies if: (a) a * life insurance company ceases to be a * subsidiary member of a * consolidated group at a time (the leaving time ); and (b) ignoring section 713 ‑ 505, at the leaving time, no other * member of the group is a life insurance company that has a * complying superannuation asset pool; and (c) at the leaving time, the * head company has either: (i) a * tax loss of the * complying superannuation class; or (ii) a * net capital loss from * complying superannuation assets. (2) This Act operates (except so far as the contrary intention appears) for the purposes of income years ending after the leaving time as if: (a) the * life insurance company had made the loss for the income year in which the leaving time occurs; and (b) the * head company had not made the loss for the income year for which it made the loss. Note: Section 707 ‑ 410 (Exit history rule does not treat entity as having made a loss) does not prevent the life insurance company from having the loss under this section, because that section merely states that the company is not taken under section 701 ‑ 40 (Exit history rule) to have made a loss. (3) The * life insurance company is not prevented from * utilising the loss for the income year in which the leaving time occurs merely because this Act operates as if the life insurance company had made the loss for that year.

Amendment history: Inserted by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 45 of 2008, effective 26 June 2008 | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015

s 713-575 — Terminating value of certain assets where life insurance company leaves group

(1) This section applies if a * life insurance company (the leaving entity ) ceases to be a * subsidiary member of a * consolidated group at a time (the leaving time ). (2) For the purposes of applying section 711 ‑ 25 in relation to the leaving entity, the * head company’s terminating value for an asset that it holds at the leaving time because the leaving entity is taken by subsection 701 ‑ 1(1) to be a part of the head company is the * transfer value of the asset at the leaving time, if the asset is: (a) a * complying superannuation asset, or a * segregated exempt asset, of the head company; or (b) held by the head company for the purpose of discharging its liabilities under the * net investment component of ordinary life insurance policies (except policies that provide for * participating benefits or * discretionary benefits under * life insurance business carried on in Australia).

Amendment history: Inserted by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 45 of 2008, effective 26 June 2008 | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015

s 713-580 — Valuing certain liabilities where life insurance company leaves group

(1) Despite section 711 ‑ 45, if the leaving entity mentioned in step 4 in the table in section 711 ‑ 20 is a * life insurance company, the leaving entity’s liabilities mentioned in this section are to be valued as mentioned in this section. (2) To avoid doubt, those liabilities are the liabilities that become those of the leaving entity because section 701 ‑ 1 (Single entity rule) ceases to apply to the leaving entity when it ceases to be a * subsidiary member of the group. (3) The value of the leaving entity’s * complying superannuation liabilities (if any) is the amount worked out under section 320 ‑ 190 at the leaving time. (4) The value of the leaving entity’s * exempt life insurance policy liabilities (if any) is the amount worked out under section 320 ‑ 245 at the leaving time. (5) Subsection (6) applies to a liability of the leaving entity if: (a) the liability is under the * net risk component of a * life insurance policy; and (b) the leaving entity could deduct under section 320 ‑ 80 an amount for the * risk component of claims paid under the policy on or after the time it ceased to be a * member of the * consolidated group. (6) The value of that liability is the * current termination value of the * net risk component of the * life insurance policy at the leaving time (calculated by an * actuary). (7) The value of the leaving entity’s liabilities under the * net investment component of ordinary life insurance policies is the amount worked out for those liabilities under subsection 320 ‑ 190(2) as if those liabilities were * complying superannuation liabilities.

Amendment history: Inserted by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 45 of 2008, effective 26 June 2008 | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015

s 713-585 — Obligation to value certain assets and liabilities at leaving time

Division 320 has effect as if the time when a * life insurance company ceases to be a * subsidiary member of a * consolidated group were a * valuation time for the purposes of sections 320 ‑ 175 and 320 ‑ 230. Note: This means that there must be a valuation of the complying superannuation assets and complying superannuation liabilities under section 320 ‑ 175 (with the consequences set out in section 320 ‑ 180), and a valuation of the segregated exempt assets and exempt life insurance policy liabilities under section 320 ‑ 230 (with the consequences set out in section 320 ‑ 235), as at that time.

Amendment history: Inserted by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 45 of 2008, effective 26 June 2008 | Amended by No 70 of 2015, effective Sch 1 (items 65–108, 188–192, 195–205): 1 July 2015 (s 2(1) items 3, 4, 6) Sch 2 (items 17, 24–29, 34–39), Sch 6 (items 13–30, 32–38) and Sch 7 (items 1, 5–11): 25 June 2015 (s 2(1) items 7, 11, 13, 20) Sch 4 (items 1, 2) and Sch 5 (item 1): 26 June 2015 (s 2(1) items 7A, 8) Sch 4 (items 3, 4): 1 July 2025 (s 2(1) item 7B) Sch 6 (item 31): 29 June 2013 (s 2(1) item 12) The commencement date for amendments made by the Tax and Superannuation Laws Amendment (2015 Measures No. 1) Act 2015 Sch 4 (items 1, 2) was retrospectively changed from 25 June 2015 to 26 June 2015

s 713-700 — What this Subdivision is about

This Subdivision sets out special rules for a general insurance company becoming or ceasing to be a subsidiary member of a consolidated group. Table of sections Tax cost setting rules for general insurance companies joining consolidated group 713 ‑ 705 Certain assets taken to be retained cost base assets where general insurance company joins group Liabilities and reserves of general insurance companies joining and leaving consolidated groups 713 ‑ 710 Treatment of liabilities and reserves for income year when general insurance company joins or leaves group 713 ‑ 715 If general insurance company joins consolidated group 713 ‑ 720 If general insurance company leaves consolidated group 713 ‑ 725 Treatment of certain assets and liabilities of general insurance companies

Amendment history: Inserted by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16)

s 713-705 — Certain assets taken to be retained cost base assets where general insurance company joins group

(1) This section applies if: (a) a * general insurance company becomes a * subsidiary member of a * consolidated group at a time (the joining time ); and (b) that company has demutualised under Division 9AA of Part III of the Income Tax Assessment Act 1936 ; and (c) in the period starting just after the company demutualises and ending at the joining time, all of the * membership interests in the company were owned by the same group. (2) A goodwill asset of the company just before the joining time is a retained cost base asset . (3) The goodwill asset’s * tax cost setting amount is its amount (worked out in accordance with subsection 121AN(2) of the Income Tax Assessment Act 1936 ) on the applicable accounting day (see subsection 121AN(4) of that Act).

Amendment history: Inserted by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16)

s 713-710 — Treatment of liabilities and reserves for income year when general insurance company joins or leaves group

Sections 713 ‑ 715 and 713 ‑ 720 affect how sections 321 ‑ 10, 321 ‑ 15, 321 ‑ 50 and 321 ‑ 55 (the affected sections ) apply in relation to these values (the affected values ): (a) the value of a * general insurance company’s adjusted * liability for incurred claims under * general insurance policies that is worked out under section 321 ‑ 20; (b) the value of a general insurance company’s adjusted * liability for remaining coverage under general insurance policies that is worked out under section 321 ‑ 60. Note 1: Sections 321 ‑ 10 and 321 ‑ 15 both operate on the basis of a comparison of the value of a general insurance company’s adjusted liability for incurred claims at the end of the current year with the value of that liability at the end of the previous income year, so that: (a) section 321 ‑ 10 includes an amount in the company’s assessable income for the current year if the value at the end of the current year is less than the value at the end of the previous income year; and (b) section 321 ‑ 15 allows a deduction for the current year if the value at the end of the current year is more than the value at the end of the previous income year. Note 2: Sections 321 ‑ 50 and 321 ‑ 55 both operate on the basis of a comparison of the value of a general insurance company’s adjusted liability for remaining coverage at the end of the current year with the value of that reserve at the end of the previous income year, so that: (a) section 321 ‑ 50 includes an amount in the company’s assessable income for the current year if the value at the end of the current year is less than the value at the end of the previous income year; and (b) section 321 ‑ 55 allows a deduction for the current year if the value at the end of the current year is more than the value at the end of the previous income year.

Amendment history: Inserted by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16) | Amended by No 79 of 2010, effective Sch 1 (items 3–5, 27–32), Sch 2 (items 2–8, 17–45), Sch 3 (items 2–59), Sch 4 (items 2–6, 38–46, 51) and Sch 5 (items 2, 6–13): 1 July 2010 (s 2(1) items 2–4) | Amended by No 52 of 2024, effective sch 3 (items 1 ‑ 5): 29 June 2024 (s 2(1) item 3) sch 4 ‑ 7: 1 July 2024 (s 2(1) item 4)

s 713-715 — If general insurance company joins consolidated group

(1) This section applies if a * general insurance company becomes a * subsidiary member of a * consolidated group at a time (the joining time ). (2) The object of this section is to ensure that the * head company of the * consolidated group bears the income tax consequences relating to changes after the joining time in the affected values. Note: The general insurance company bears the income tax consequences relating to a change in the affected values before the joining time, because section 701 ‑ 30 ensures that the affected sections apply in relation to a part of the income year before that time when the company was not a subsidiary member of a consolidated group as if that part were an income year. (3) The affected sections apply for the head company core purposes set out in section 701 ‑ 1 (Single entity rule) as if each of the affected values at the end of the last income year ending before the joining time were the amount that would have been that value had that income year ended just before the joining time.

Amendment history: Inserted by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16)

s 713-720 — If general insurance company leaves consolidated group

(1) This section applies if a * general insurance company ceases to be a * subsidiary member of a * consolidated group at a time (the leaving time ) in an income year (the leaving year ). (2) The object of this section is to ensure that: (a) the * head company of the * consolidated group bears the income tax consequences relating to changes before the leaving time in the affected values; and (b) the * general insurance company bears the income tax consequences relating to changes after the leaving time in the affected values. Head company’s income or deduction (3) For the head company core purposes set out in section 701 ‑ 1 (Single entity rule) relating to the leaving year (but not later income years), the affected sections have effect as if each of the affected values at the end of the leaving year for the * head company of the * consolidated group were increased by the relevant value for the * general insurance company at the end of the previous income year worked out under subsection (5). General insurance company’s income or deduction (4) For the entity core purposes set out in section 701 ‑ 1 (Single entity rule) relating to the * general insurance company and the leaving year, the affected sections have effect as if each of the affected values for the general insurance company at the end of the previous income year were worked out under subsection (5). Working out affected values at the end of the previous income year (5) Work out each of the affected values for the * general insurance company at the end of the previous income year as if it had ended at the leaving time.

Amendment history: Inserted by No 41 of 2005, effective s. 4, Schedule 1 (items 1–11), Schedule 2 (items 1–9, 11), Schedule 3 (items 17–22), Schedule 6 (items 1–3, 5, 12–15, 17–28), Schedule 7, Schedule 10 (items 36–221, 271–273) and Schedule 11 (items 4, 5): Royal Assent Sch 10 (item 247): 28 Dec 2002 (s 2(1) item 9) Sch 10 (items 248, 259, 260): 24 Oct 2002 (s 2(1) items 10, 14, 15) Sch 10 (items 249, 250–257, 263, 264): 29 June 2002 (s 2(1) items 11, 12, 17) Sch 10 (item 258): 30 June 2000 (s 2(1) item 13) Sch 10 (items 261, 262): 1 July 2000 (s 2(1) item 16)

s 713-725 — Treatment of certain assets and liabilities of general insurance companies

(1) This section applies if a * general insurance company becomes or ceases to be a * subsidiary member of a * consolidated group. (2) If the * general insurance company becomes a * subsidiary member of the group: (a) in working out the step 2 amount for the purposes of the table in section 705 ‑ 60, reduce that amount by the sum of the amount of each thing mentioned in subsection (4); and (b) in working out the * tax cost setting amount of a thing mentioned in subsection (4) for the purposes of section 705 ‑ 35, treat the * market value of the thing as zero. (3) If the * general insurance company ceases to be a * subsidiary member of the group: (a) in working out the step 4 amount for the purposes of the table in section 711 ‑ 20, reduce that amount by the sum of the amount of each thing mentioned in subsection (4); and (b) for the purposes of section 711 ‑ 25, treat the * terminating value of a thing mentioned in subsection (4) as zero. (4) The things are the * general insurance company’s: (a) * assets for insurance acquisition cash flows to the extent that they are used to measure the company’s adjusted * liability for remaining coverage; and (b) deferred reinsurance expenses to the extent that they are used to measure the company’s adjusted liability for remaining coverage; and (c) recoveries receivable, or potential recoveries, measured under the * applicable insurance contracts standard to the extent that they relate to insurance contracts or reinsurance contracts; and (d) claims handling costs that are neither attached to, nor directly attributable to, a particular claim, to the extent that these costs are used to measure the company’s adjusted * liability for incurred claims; and (e) loss components and loss ‑ recovery components of onerous contracts to the extent that they are used to measure the company’s adjusted liability for remaining coverage.

Amendment history: Inserted by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B) | Amended by No 52 of 2024, effective sch 3 (items 1 ‑ 5): 29 June 2024 (s 2(1) item 3) sch 4 ‑ 7: 1 July 2024 (s 2(1) item 4)

s 715-15 — Object of this Subdivision

(1) The object of this Subdivision is to give effect to the purposes of Subdivision 165 ‑ CC (about change of ownership or control of a company that has an unrealised net loss) in these cases: (a) on formation of a * consolidated group, a * CGT asset held directly by the * head company is affected by that Subdivision, and the * business continuity test is failed; (b) on an entity becoming a * subsidiary member of a consolidated group, an asset consisting of: (i) a * membership interest that a * member of the group (including a chosen transitional entity under Division 701 of the Income Tax (Transitional Provisions) Act 1997 ) holds in the entity; or (ii) a liability that the entity owes to such a member; is affected by that Subdivision, and the business continuity test is failed; (c) on a company becoming a subsidiary member: (i) a CGT asset of the company that becomes an asset of the head company is affected by that Subdivision; and (ii) because the company is a chosen transitional entity, the asset does not have its tax cost reset; and (iii) the business continuity test is failed; (d) on an entity ceasing to be a subsidiary member, a CGT asset of the head company that becomes an asset of the entity is affected by that Subdivision, and the business continuity test is failed. Note: Subdivision 165 ‑ CC also affects an entity that has deferred losses under Subdivision 170 ‑ D on assets that it formerly owned. Subdivision 715 ‑ D gives effect to the purposes of Subdivision 165 ‑ CC if such an entity becomes a member of a consolidated group. (2) This Subdivision achieves its object by supplementing and modifying the application of Subdivision 165 ‑ CC to take account of how the rest of this Part treats * members of a * consolidated group (in particular the provisions about entities becoming or ceasing to be members).

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 147 of 2005, effective Schedule 1 (items 4–168, 169(2), 170–176), Schedule 2 (items 1, 12–24, 26–28), Schedule 3, Schedule 4 (items 4–12), Schedule 5 (items 13, 14, 20), Schedule 6 (items 1, 2, 10(1)) and Schedule 7 (items 14–16, 20): Royal Assent | Amended by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 7 of 2019, effective Sch 1 (items 1–13, 33–164): 1 Apr 2019 (s 2(1) item 1)

s 715-25 — Subdivision 165 ‑ CC stops applying to earlier changeover time

(1) At and after the time (the membership time ) when a company becomes a * member of a * consolidated group, Subdivision 165 ‑ CC does not apply to the company in relation to a * changeover time that happened before the membership time, except for the purposes of section 715 ‑ 30 (which defines 165 ‑ CC tagged asset ). Note 1: Subdivision 165 ‑ CC is about change of ownership or control of a company that has an unrealised net loss. Note 2: If the company has 165 ‑ CC tagged assets at the membership time, there are further consequences under this Subdivision and Subdivision 715 ‑ D. Also, Subdivision 165 ‑ CC can apply to the head company of the group in relation to a changeover time that happens for it at or after the membership time. See section 715 ‑ 75. (2) Subsection (1) continues to have effect even if the company later stops being a * member of the group.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 715-30 — Meaning of 165 ‑ CC tagged asset

A * CGT asset is a 165 ‑ CC tagged asset of a company at a particular time if, and only if: (a) that time is at or after the most recent * changeover time (if any) for the company; and (b) at that changeover time, the company had an unrealised net loss under section 165 ‑ 115E; and (c) the asset is covered by subsection 165 ‑ 115A(1A) as applying to that changeover time; and (d) the company would not, at that changeover time, satisfy the maximum net asset value test under section 152 ‑ 15; and (e) if the company has chosen under subsection 165 ‑ 115A(1B) in relation to that changeover time—the company * acquired the asset for $10,000 or more.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 715-35 — Meaning of final RUNL

A company’s final RUNL at a particular time (the test time ) is the amount that would have been the company’s * residual unrealised net loss at the time of: (a) if no event that subsection 165 ‑ 115BB(2) refers to as a relevant event actually happens at the test time—a notional event of that kind happening at the test time; or (b) otherwise—a notional event of that kind that happens at the test time, and that the company determines under paragraph 165 ‑ 115BB(1)(b) to have happened later than each event that actually happened at that time. Note: This Subdivision reduces a company’s final RUNL as amounts of it are applied for various purposes.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 715-50 — Step 1 amount is reduced if membership interest in subsidiary member is 165 ‑ CC tagged asset and business continuity test is failed

(1) The amount taken into account under subsection 705 ‑ 65(1) (about the cost of membership interests in the joining entity) for a * membership interest that a * member of the joined group holds in the joining entity at the joining time is reduced if: (a) apart from this section, the amount would be the membership interest’s * reduced cost base (if appropriate, as modified by a later provision of section 705 ‑ 65); and (b) the membership interest is at that time a * 165 ‑ CC tagged asset of that member, and that member owned it at the * changeover time for that member; and (c) that member’s * final RUNL just before the joining time was greater than nil; and (d) that member does not satisfy the * business continuity test for: (i) the period (the business continuity test period ) consisting of the * head company’s * trial year; and (ii) the time (the test time ) just before the * changeover time. (2) If at the joining time that * member holds: (a) 2 or * more membership interests in the joining entity; or (b) at least one membership interest in the joining entity, and at least one membership interest in another member of the joined group; this section applies to each such membership interest in whichever order that member determines. Amount of reduction (3) The amount taken into account under subsection 705 ‑ 65(1) is reduced to the * membership interest’s * market value at the joining time. (4) However, if that member’s * final RUNL (as reduced by any previous reductions under this section) is less than the difference between: (a) the * reduced cost base referred to in paragraph (1)(a); and (b) the * market value referred to in subsection (3); the amount taken into account under subsection 705 ‑ 65(1) is instead reduced by that final RUNL. (5) That * final RUNL is reduced by the amount of the reduction under subsection (3) or (4). Non ‑ membership equity interests (6) Subsection 705 ‑ 65(6) (which treats * non ‑ membership equity interests as * membership interests) also applies for the purposes of this section.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 147 of 2005, effective Schedule 1 (items 4–168, 169(2), 170–176), Schedule 2 (items 1, 12–24, 26–28), Schedule 3, Schedule 4 (items 4–12), Schedule 5 (items 13, 14, 20), Schedule 6 (items 1, 2, 10(1)) and Schedule 7 (items 14–16, 20): Royal Assent | Amended by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B) | Amended by No 7 of 2019, effective Sch 1 (items 1–13, 33–164): 1 Apr 2019 (s 2(1) item 1)

s 715-55 — Step 2 amount is affected if liability of subsidiary member is 165 ‑ CC tagged asset of another group member and business continuity test is failed

(1) The amount (the comparison amount ) applicable under the table in subsection 705 ‑ 75(2) (about reduction of the step 2 amount) for an accounting liability of the joining entity that is owed to a * member of the joined group at the joining time is reduced if: (a) apart from this section, the comparison amount would be the * reduced cost base (if appropriate, as modified by a later provision of section 705 ‑ 75) of the asset of that member that is constituted by the accounting liability; and (b) the asset is at that time a * 165 ‑ CC tagged asset of that member, and that member owned it at the * changeover time; and (c) that member’s * final RUNL just before the joining time (as reduced by any reductions under section 715 ‑ 50) was greater than nil; and (d) that member does not satisfy the * business continuity test for: (i) the period (the business continuity test period ) consisting of the * head company’s * trial year; and (ii) the time (the test time ) just before the * changeover time. Note: Paragraph (1)(c) has the effect that if both this section and section 715 ‑ 50 apply to the same member of the joined group, section 715 ‑ 50 is applied before this section. (2) If at the joining time that * member holds: (a) 2 or * more assets constituted by accounting liabilities of the joining entity; or (b) at least one asset constituted by an accounting liability of the joining entity, and at least one asset constituted by an accounting liability of another member of the group; this section applies to each such asset in whichever order that member determines. Amount of reduction (3) The comparison amount is reduced to the asset’s * market value at the joining time. (4) However, if that member’s * final RUNL (as reduced by any previous reductions under section 715 ‑ 50 or this section) is less than the difference between: (a) the * reduced cost base referred to in paragraph (1)(a); and (b) the asset’s * market value at the joining time; the comparison amount is instead reduced by that final RUNL. (5) That * final RUNL is reduced by the amount of the reduction under subsection (3) or (4).

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 147 of 2005, effective Schedule 1 (items 4–168, 169(2), 170–176), Schedule 2 (items 1, 12–24, 26–28), Schedule 3, Schedule 4 (items 4–12), Schedule 5 (items 13, 14, 20), Schedule 6 (items 1, 2, 10(1)) and Schedule 7 (items 14–16, 20): Royal Assent | Amended by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 7 of 2019, effective Sch 1 (items 1–13, 33–164): 1 Apr 2019 (s 2(1) item 1)

s 715-60 — Assets that the head company already owns

(1) At the time (the formation time ) when a * consolidated group comes into existence under paragraph 703 ‑ 5(1)(a), a loss denial pool of the * head company is created if: (a) the formation time is not a * changeover time for the head company; and (b) at the formation time, the head company owns a * CGT asset: (i) that is a * 165 ‑ CC tagged asset of the head company at that time; and (ii) that it owned at the * changeover time; and (iii) that is not a * membership interest in a * member of the group; and (iv) that is not a right or option (including a contingent right or option), created or issued by a member of the group, to acquire such a membership interest; and (v) that is not constituted by a liability owed to the head company by a member of the group; or 2 or more such assets; and (c) the head company’s * final RUNL just before the formation time (as reduced by any reductions under section 715 ‑ 50 or 715 ‑ 55) was greater than nil; and (d) the head company does not satisfy the * business continuity test for: (i) the period (the business continuity test period ) consisting of the head company’s * trial year; and (ii) the time (the test time ) just before the * changeover time. Note: Paragraph (1)(c) has the effect that if the head company has 165 ‑ CC tagged assets that are affected by section 715 ‑ 50 or 715 ‑ 55 (because they are membership interests in, or accounting liabilities owed by, another group member), those sections are applied before this section. (2) When it is created, the pool consists of the one or more * CGT assets referred to in paragraph (1)(b), and its loss denial balance is equal to the * final RUNL referred to in paragraph (1)(c). Note 1: The pool is distinct from any other loss denial pool of the head company, for example, one created at the formation time under section 715 ‑ 70. Note 2: 170 ‑ D deferred losses on 165 ‑ CC tagged assets of the head company may be added to the pool by subsection 715 ‑ 355(1).

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 147 of 2005, effective Schedule 1 (items 4–168, 169(2), 170–176), Schedule 2 (items 1, 12–24, 26–28), Schedule 3, Schedule 4 (items 4–12), Schedule 5 (items 13, 14, 20), Schedule 6 (items 1, 2, 10(1)) and Schedule 7 (items 14–16, 20): Royal Assent | Amended by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 7 of 2019, effective Sch 1 (items 1–13, 33–164): 1 Apr 2019 (s 2(1) item 1)

s 715-70 — Assets of subsidiary member that become those of head company

(1) At the time (the formation time ) when an entity becomes a * subsidiary member of a * consolidated group, a loss denial pool of the * head company of the group is created if: (a) the formation time is not a * changeover time for the head company; and (b) the entity is a chosen transitional entity under Division 701 of the Income Tax (Transitional Provisions) Act 1997 ; and (c) subsection (2) or (4) of this section is satisfied. Note 1: If the entity is a chosen transitional entity, section 701 ‑ 15 of the Income Tax (Transitional Provisions) Act 1997 prevents: • section 701 ‑ 10 (cost to head company of assets of joining entity); and • subsection 701 ‑ 35(4) (setting value of trading stock at tax ‑ neutral amount); of this Act from applying to the entity’s assets in relation to the formation time. Note 2: The pool is distinct from any other loss denial pool of the head company, for example, one created under this section because another entity becomes a subsidiary member of the group at the formation time. Joining entity has 165 ‑ CC tagged assets (2) This subsection is satisfied if: (a) a * CGT asset of the entity, or each of 2 or more CGT assets of the entity: (i) is a * 165 ‑ CC tagged asset of the entity at the formation time; and (ii) was owned by the entity at the * changeover time; and (iii) is not a * membership interest in a * member of the group; and (iv) is not a right or option (including a contingent right or option), created or issued by a member of the group, to acquire such a membership interest; and (v) is not constituted by a liability owed to the entity by a member of the group at the formation time; and (b) the entity’s * final RUNL just before the formation time (as reduced by any reductions under section 715 ‑ 50 or 715 ‑ 55) was greater than nil; and (c) the entity does not satisfy the * business continuity test for: (i) the period (the business continuity test period ) consisting of the entity’s * trial year; and (ii) the time (the test time ) just before the * changeover time. Note: Paragraph (2)(b) has the effect that if the entity has 165 ‑ CC tagged assets that are affected by section 715 ‑ 50 or 715 ‑ 55 (because they are membership interests in, or accounting liabilities owed by, another group member), those sections are applied before this section. (3) When it is created because of subsection (2), the pool consists of the one or more * CGT assets referred to in paragraph (2)(a), and its loss denial balance is equal to the * final RUNL referred to in paragraph (2)(b). Note: 170 ‑ D deferred losses on 165 ‑ CC tagged assets of the head company may be added to the pool by subsection 715 ‑ 355(2). Entity has loss denial pool (4) This subsection is satisfied if, just before the formation time, the entity had a * loss denial pool. (5) When it is created because of subsection (4), the * head company’s loss denial pool: (a) consists of the one or more * CGT assets of which the entity’s loss * denial pool consisted; and (b) has a loss denial balance equal to the * loss denial balance of the entity’s loss denial pool; just before the formation time.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23) | Amended by No 147 of 2005, effective Schedule 1 (items 4–168, 169(2), 170–176), Schedule 2 (items 1, 12–24, 26–28), Schedule 3, Schedule 4 (items 4–12), Schedule 5 (items 13, 14, 20), Schedule 6 (items 1, 2, 10(1)) and Schedule 7 (items 14–16, 20): Royal Assent | Amended by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 7 of 2019, effective Sch 1 (items 1–13, 33–164): 1 Apr 2019 (s 2(1) item 1)

s 715-75 — Extension of single entity rule and entry history rule

(1) Subsection 701 ‑ 1(1) (Single entity rule) and section 701 ‑ 5 (Entry history rule) also have effect for all the purposes of Subdivision 165 ‑ CC (about change of ownership or control of a company that has an unrealised net loss). Note: One consequence of this is that the head company is the only member of a consolidated group that can have a changeover time and be subject to consequences under Subdivision 165 ‑ CC. The head company is treated as owning all CGT assets owned by group members, and as making relevant losses. (2) This section is not intended to limit the effect that subsection 701 ‑ 1(1) and section 701 ‑ 5 have apart from this section.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 715-80 — Application of sections 715 ‑ 85 to 715 ‑ 110

Sections 715 ‑ 85 to 715 ‑ 110 apply if, at a particular time (the leaving time ), an entity (the leaving entity ) ceases to be a * subsidiary member of a * consolidated group. Note 1: If a changeover time happened to the head company at or after the group came into existence and before the leaving time, Subdivision 165 ‑ CC does not apply to the head company at and after the leaving time, in respect of assets that leave with the leaving entity, in relation to the changeover time. This is because the head company can no longer make a capital loss, or become entitled to a deduction, in respect of a CGT event happening to any of those assets. Note 2: If, just before the leaving time, the head company had a loss denial pool, see section 715 ‑ 120.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 715-85 — First changeover time for leaving company at or after leaving time

If the leaving entity is a company, its first * changeover time at or after the leaving time is determined: (a) on the basis that the reference time under subsection 165 ‑ 115A(2A) is the one that would be used in determining whether the leaving time was a changeover time for the head company ; and (b) making the additional assumptions in section 715 ‑ 290. Note: If the leaving entity is a trust, it cannot have a changeover time (because Subdivision 165 ‑ CC applies only to companies), so section 715 ‑ 95 applies to it instead: see subsection 715 ‑ 95(2).

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 715-90 — How business continuity test applies if leaving time is changeover time for leaving company

(1) This section applies if: (a) the leaving entity is a company; and (b) the leaving time is a * changeover time for the leaving entity. (2) In applying to the leaving entity for the * changeover time that is the leaving time, subsection 165 ‑ 115B(3) and paragraph 165 ‑ 115BA(5)(c) have effect as if they provided that the time just after the changeover time were the test time for applying section 165 ‑ 13 to the company. Note: This ensures that the business continuity test is applied to the business that the leaving entity carries on at the leaving time.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 142 of 2003, effective s 4, Sch 1 (items 1–15, 18–40), Sch 2 (items 1, 2, 4–29, 33–49, 52, 53), Sch 3, Sch 7 (items 1–23) and Sch 8 (items 4–17, 17A, 17B, 18–21, 24(2), (3)): 17 Dec 2003 (s 2(1) items 1–5, 10, 11, 13) | Amended by No 12 of 2012, effective s 4, Sch 2 (items 1–23), Sch 5 and Sch 6 (items 3–6, 11–20, 25, 26, 35–67, 74–83, 94–96, 117–142, 157–178, 183, 200–203, 214–217, 235–240, 248): 21 Mar 2012 (s 2(1) items 1, 3, 5, 6, 10, 14, 18, 19, 27, 31) Sch 6 (item 7): 1 July 2007 (s 2(1) item 7) Sch 6 (item 10): 1 July 2010 (s 2(1) item 9) Sch 6 (items 106–116): 22 Mar 2012 (s 2(1) items 16, 17) Sch 6 (item 143): 22 Jan 2013 (s 2(1) item 20) Sch 6 (items 146–148): never commenced (s 2(1) item 23) Sch 6 (items 179, 181): 3 Oct 2008 (s 2(1) items 28, 30) Sch 6 (item 180): 3 June 2010 (s 2(1) item 29) | Amended by No 7 of 2019, effective Sch 1 (items 1–13, 33–164): 1 Apr 2019 (s 2(1) item 1)

s 715-95 — If ownership and control of leaving entity have not changed since head company’s last changeover time

(1) This section applies if: (a) the leaving entity is a company; and (b) the leaving time is not a * changeover time for the leaving entity; and (c) just before the leaving time, the * head company owned at least one * CGT asset: (i) that was a * 165 ‑ CC tagged asset just before the leaving time; and (ii) that it owned at the latest changeover time for the head company at or after the group came into existence and before the leaving time; and (d) at least one asset covered by paragraph (c) is an asset (a leaving asset ) that becomes an asset of the leaving entity at the leaving time because subsection 701 ‑ 1(1) (Single entity rule) ceases to apply to the entity; and (e) the head company’s * final RUNL at the leaving time is greater than nil. (2) This section also applies if the leaving entity is a trust. (3) If the * head company does not satisfy the * business continuity test for: (a) the period (the business continuity test period ) starting at the earlier of: (i) the time 12 months before the leaving time; and (ii) when the head company came into existence; and ending just before the leaving time; and (b) the time (the test time ) just before the * changeover time; the head company must make one of the choices for which sections 715 ‑ 100, 715 ‑ 105 and 715 ‑ 110 provide. Note: For provisions about making one of these choices, see sections 715 ‑ 175 to 715 ‑ 185.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 147 of 2005, effective Schedule 1 (items 4–168, 169(2), 170–176), Schedule 2 (items 1, 12–24, 26–28), Schedule 3, Schedule 4 (items 4–12), Schedule 5 (items 13, 14, 20), Schedule 6 (items 1, 2, 10(1)) and Schedule 7 (items 14–16, 20): Royal Assent | Amended by No 164 of 2007, effective s. 4, Schedule 1 (items 1–24, 36–67, 71), Schedules 2–6, Schedule 7 (items 1–3, 5–12, 14), Schedule 8 (items 6–13), Schedule 9 and Schedule 10 (items 1, 7–25, 91, 92): Royal Assent Schedule 10 (items 57–88): 1 July 2010 Sch 12 (items 72–87): 27 Sept 2007 (s 2(1) item 9) | Amended by No 7 of 2019, effective Sch 1 (items 1–13, 33–164): 1 Apr 2019 (s 2(1) item 1)

s 715-100 — First choice: adjustable values of leaving assets reduced to nil

The first choice is to reduce the * adjustable value of each leaving asset to nil. The choice has effect accordingly, just before the leaving time. The * head company’s * final RUNL is not reduced because of it. Note: The consequences of the choice are worked out under section 715 ‑ 145.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 715-105 — Second choice: head company’s final RUNL applied in reducing adjustable values of leaving assets that are loss assets

(1) The second choice is to reduce under this section the * adjustable value of each leaving asset (a loss asset ) for which the * head company would have had a notional capital loss, or notional revenue loss, under section 165 ‑ 115F at the time (the test time ) just before the leaving time if the test time had been a * changeover time for the head company. The choice has effect accordingly. Note: The consequences of the choice are worked out under this section and section 715 ‑ 145. (2) If: (a) 2 or more entities cease to be * subsidiary members of the * consolidated group at the leaving time; and (b) 2 or more of them make the second choice; the choices have effect in whichever order the * head company determines. (3) This section applies to each of the loss assets in order, according to their respective * adjustable values (apart from this section) at the test time: from largest to smallest. (If an asset has more than one such adjustable value, use the greater or greatest of them.) (4) At the test time, the * adjustable value of the loss asset is reduced to the asset’s * market value at that time. (5) However, if the * head company’s * final RUNL at the leaving time (as reduced by any previous reductions under this section) is less than the difference between: (a) the * adjustable value of the loss asset (apart from this section) at the test time; and (b) the asset’s * market value at the test time; the adjustable value is instead reduced at the test time by that final RUNL. (6) That * final RUNL is reduced by the amount of the reduction under subsection (4) or (5). If 2 or more such reductions are made for the same asset (because it has 2 or more different characters), that final RUNL is reduced by the greater or greatest of the reductions.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 715-110 — Third choice: loss denial pool of leaving entity created

(1) The third choice can be made only if every asset covered by paragraph 715 ‑ 95(1)(c) is a leaving asset. The choice is to have a loss denial pool of the leaving entity created at the leaving time, consisting of every leaving asset. (To avoid doubt, the choice can be made even if the leaving entity is not a company.) (2) A choice under this section has effect accordingly. The pool is distinct from any other loss denial pool of the leaving entity. (3) When the pool is created, its loss denial balance is equal to the * head company’s * final RUNL at the leaving time. Note: If the head company makes this choice, the leaving entity can choose to cancel the loss denial pool by reducing reduced cost bases of assets in the pool: see section 715 ‑ 185.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 715-120 — What happens

(1) This section applies if: (a) at a particular time (the leaving time ), an entity (the leaving entity ) ceases to be a * subsidiary member of a * consolidated group; and (b) just before the leaving time, the * head company had a * loss denial pool; and (c) at the leaving time, at least one * CGT asset (a leaving asset ) that was in the pool just before that time becomes a CGT asset of the leaving entity because subsection 701 ‑ 1(1) (Single entity rule) ceases to apply to the entity; (2) Each leaving asset leaves the * loss denial pool at the leaving time. (3) If: (a) the leaving entity is a company and the leaving time is not a * changeover time for the leaving entity; or (b) the leaving entity is a trust; the * head company must make one of the choices for which sections 715 ‑ 125, 715 ‑ 130 and 715 ‑ 135 provide. For provisions about making one of these choices, see sections 715 ‑ 175 to 715 ‑ 185.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 715-125 — First choice: adjustable values of leaving assets reduced to nil

The first choice is to reduce the * adjustable value of each leaving asset to nil. The choice has effect accordingly, just before the leaving time. The * loss denial balance of the * head company’s * loss denial pool is not reduced because of it. Note: The consequences of the choice are worked out under section 715 ‑ 145.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 715-130 — Second choice: pool’s loss denial balance applied in reducing adjustable values of leaving assets that are loss assets

(1) The second choice is to reduce under this section the * adjustable value of each leaving asset (a loss asset ) for which the * head company would have had a notional capital loss, or notional revenue loss, under section 165 ‑ 115F at the time (the test time ) just before the leaving time if the test time had been a * changeover time for the head company. The choice has effect accordingly. Note: The consequences of the choice are worked out under this section and section 715 ‑ 145. (2) If: (a) 2 or more entities cease to be * subsidiary members of the * consolidated group; and (b) 2 or more of them make the second choice; the choices have effect in the same order as the entities cease being subsidiary members. If 2 or more of the entities ceased at the same time, their choices have effect in whichever order the * head company determines. (3) This section applies to each of the loss assets in order, according to their respective * adjustable values (apart from this section) at the test time: from largest to smallest. (If an asset has more than one such adjustable value, use the greater or greatest of them.) (4) At the test time, the * adjustable value of the loss asset is reduced to the asset’s * market value at that time. (5) However, if the * loss denial balance (as reduced by any previous reductions under this section or section 715 ‑ 160) of the * head company’s * loss denial pool is less than the difference between: (a) the * adjustable value of the loss asset (apart from this section) at the test time; and (b) the asset’s * market value at the test time; the adjustable value is instead reduced at the test time by that loss denial balance. (6) That * loss denial balance is reduced at the leaving time by the amount of the reduction under subsection (3) or (4). If 2 or more such reductions are made for the same asset (because it has 2 or more different characters), that loss denial balance is reduced by the greater or greatest of the reductions.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 715-135 — Third choice: loss denial pool of leaving entity created

(1) The third choice can be made only if every asset that was in the * loss denial pool just before the leaving time is a leaving asset. The choice is to have a loss denial pool of the leaving entity created at the leaving time, consisting of every leaving asset. (To avoid doubt, the choice can be made even if the leaving entity is not a company.) (2) A choice under this section has effect accordingly. The pool is distinct from any other loss denial pool of the leaving entity. (3) When the leaving entity’s loss denial pool is created, its loss denial balance equals the loss denial balance of the head company’s loss denial pool (as reduced by any previous reductions under section 715 ‑ 130 or 715 ‑ 160). Note: If the head company makes this choice, the leaving entity can choose to cancel the loss denial pool by reducing reduced cost bases of assets in the pool: see section 715 ‑ 185. (4) The head company’s * loss denial pool ceases to exist when the leaving entity’s loss denial pool is created.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 715-145 — Effect of choice on adjustable value of leaving asset

(1) This section has effect for the purposes of determining the consequences of a choice under any of sections 715 ‑ 100, 715 ‑ 105, 715 ‑ 125, 715 ‑ 130 and 715 ‑ 185 (the choice provisions ) for a leaving asset. (2) The asset’s adjustable value at the time (the test time ) just before the leaving time is worked out under this table. (If the asset is covered by 2 or more items, there are consequences for it under the choice provisions and this section in respect of each of the items.) Adjustable value at the test time Item If: Its adjustable value is: 1 the asset is a * CGT asset its * reduced cost base 2 the asset is an item of * trading stock of the * head company at the test time, and became part of the * head company’s trading stock in the income year (the test year ) in which the test time occurs its * cost 3 the asset is an item of * trading stock of the * head company at the test time, item 2 does not apply, and at the end of the last income year before the test year, the item was * valued at its * cost its * cost 4 the asset is an item of * trading stock of the * head company at the test time and neither of items 2 and 3 applies its * value as trading stock of the head company on hand at the start of the income year in which the test time occurs 5 the asset is a * depreciating asset worked out under section 40 ‑ 85 6 the asset is a * revenue asset the total of the amounts that would be subtracted from the gross disposal proceeds in calculating any profit or loss on disposal of the asset by the head company (3) If any of the choice provisions reduces at the test time the asset’s * adjustable value, the thing identified for the asset under the table in subsection (2) of this section is reduced by the same amount. (4) Subsection (3) has effect for the purposes of working out under section 711 ‑ 30 the * head company’s * terminating value for the asset at the leaving time.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 12 of 2012, effective s 4, Sch 2 (items 1–23), Sch 5 and Sch 6 (items 3–6, 11–20, 25, 26, 35–67, 74–83, 94–96, 117–142, 157–178, 183, 200–203, 214–217, 235–240, 248): 21 Mar 2012 (s 2(1) items 1, 3, 5, 6, 10, 14, 18, 19, 27, 31) Sch 6 (item 7): 1 July 2007 (s 2(1) item 7) Sch 6 (item 10): 1 July 2010 (s 2(1) item 9) Sch 6 (items 106–116): 22 Mar 2012 (s 2(1) items 16, 17) Sch 6 (item 143): 22 Jan 2013 (s 2(1) item 20) Sch 6 (items 146–148): never commenced (s 2(1) item 23) Sch 6 (items 179, 181): 3 Oct 2008 (s 2(1) items 28, 30) Sch 6 (item 180): 3 June 2010 (s 2(1) item 29)

s 715-155 — When asset leaves pool

A * CGT asset leaves a * loss denial pool: (a) just after a * realisation event happens to the asset, unless the realisation event is the ending of an income year (in the case of an item of * trading stock); or (b) as mentioned in subsection 715 ‑ 120(2) (when it becomes an asset of the leaving entity).

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 715-160 — How loss denial balance is applied to losses realised on assets in pool

(1) If, apart from this section, a loss would be * realised for income tax purposes by a * realisation event that happens to a * CGT asset when it is in a * loss denial pool of an entity, the loss is reduced by the lesser of: (a) the amount of the loss; and (b) the pool’s * loss denial balance (as reduced by any previous reductions under section 715 ‑ 130 or this subsection); and the loss denial balance is reduced by the same amount. (2) Subsection (1) applies to * realisation events in the order in which they happen. If 2 or more happen at the same time, it applies to them in whichever order the entity determines. (3) Subsection (1) reduces a * loss denial balance after section 715 ‑ 130 does, unless the * realisation event happens before the leaving time referred to in that section.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 715-165 — When pool ceases to exist

(1) A * loss denial pool of a company ceases to exist when there is a * changeover time for the company. Note: The CGT assets in the pool then become subject to the application of Subdivision 165 ‑ CC (about change of ownership or control of a company that has an unrealised net loss). (2) A * loss denial pool of any entity ceases to exist: (a) when there are no * CGT assets, and no * 170 ‑ D deferred losses, in the pool; or (b) just after the * loss denial balance becomes nil; or (c) when the entity becomes a * subsidiary member of a * consolidated group; or (d) as mentioned in subsection 715 ‑ 135(4).

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 715-175 — When choice must be made

(1) A choice under section 715 ‑ 95 or 715 ‑ 120 must be made within 6 months after the leaving time, or within a further period allowed by the Commissioner. (2) After that 6 months, or that further period, the head company is taken to have made the first choice under section 715 ‑ 100 or 715 ‑ 125 unless it is established that the head company made a different choice within that 6 months or further period.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 715-180 — Head company to notify leaving entity of choice

(1) Within one month after making a choice under section 715 ‑ 95 or 715 ‑ 120, or within a further period allowed by the Commissioner, the head company must give the leaving entity written notice of the choice. (2) If the choice is to have a * loss denial pool of the leaving entity created at the leaving time, the notice must also specify the pool’s * loss denial balance at that time.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 715-185 — Leaving entity may choose to cancel loss denial pool by reducing adjustable values of assets in the pool

(1) Within 6 months after a * loss denial pool is created under section 715 ‑ 110 or 715 ‑ 135, or within a further period allowed by the Commissioner, the leaving entity may choose to be treated as if the * head company had instead made: (a) the first choice under section 715 ‑ 100 or 715 ‑ 125; or (b) the second choice under section 715 ‑ 105 or 715 ‑ 130; as specified by the leaving entity in its choice. (2) If the leaving entity makes a choice under subsection (1): (a) the * loss denial pool ceases to exist just after the leaving time; and (b) at the leaving time, the * adjustable value of each * CGT asset in the pool is reduced to what it would have been at that time if the head company had instead made the choice specified by the leaving entity in its choice. (3) The choice by the leaving entity does not affect how subsection 715 ‑ 135(4) applies to the * head company. Note: This means that the head company’s loss denial pool still ceases to exist.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 715-215 — Extension of single entity rule and entry history rule

(1) Subsection 701 ‑ 1(1) (Single entity rule) and section 701 ‑ 5 (Entry history rule) also have effect for all the purposes of Subdivision 165 ‑ CD (about reductions after alterations in ownership or control of loss company). Note: One consequence of this is that the head company is the only member of a consolidated group that can have an alteration time and be subject to reductions or other consequences under Subdivision 165 ‑ CD. The head company is treated as owning all CGT assets owned by group members, and as making relevant losses. Another consequence is for working out who has a relevant equity interest or relevant debt interest in a company that has an alteration time at which it is a loss company but not a member of a consolidated group. Interests in the loss company that are owned by subsidiary members of the group are treated as being owned by the head company. (2) This section is not intended to limit the effect that subsection 701 ‑ 1(1) and section 701 ‑ 5 have apart from this section.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 715-225 — Working out adjusted unrealised loss using individual asset method

(1) For the purposes of: (a) using the * individual asset method to work out whether the * head company of a * consolidated group has an adjusted unrealised loss under section 165 ‑ 115U at an * alteration time; or (b) working out under section 165 ‑ 115W whether the head company of a consolidated group has a trading stock decrease at an alteration time; step 1 of the method statement in subsection 165 ‑ 115U(1), or step 2 of the method statement in subsection 165 ‑ 115W(1), does not apply to an amount that was counted in respect of a * CGT asset at an earlier time if: (c) at the time (the joining time ) when an entity became a * subsidiary member of the group, the asset became an asset of the head company because of subsection 701 ‑ 1(1) (Single entity rule); and (d) the earlier time is an * alteration time that happened in respect of the entity before the joining time; unless the entity is a chosen transitional entity under Division 701 of the Income Tax (Transitional Provisions) Act 1997 . Note: If the joining entity is a chosen transitional entity, section 701 ‑ 15 of the Income Tax (Transitional Provisions) Act 1997 prevents: • section 701 ‑ 10 (cost to head company of assets of joining entity); and • subsection 701 ‑ 35(4) (setting value of trading stock at tax ‑ neutral amount); of this Act from applying to the assets of the joining entity in relation to the joining time. If the joining entity is not a chosen transitional entity, it is assumed that the process of resetting the tax costs of its assets will bring their tax costs into closer alignment to their market values, and so remove the need to consider unrealised losses on those assets that existed before the joining time. (2) This section has effect despite section 701 ‑ 5 (Entry history rule).

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 83 of 2004, effective s 4, Sch 1 (items 116–124), Sch 2 (items 1, 2, 5–8, 10–18, 20–33, 36–50, 52–64, 67–74), Sch 3 (items 4–7), Sch 5 (items 1, 2), Sch 6, Sch 8 (items 9–11), Sch 10 (items 43, 44) and Sch 12: 25 June 2004 (s 2(1) items 1, 12–14, 16, 17, 20, 27, 29, 30) Sch 1 (items 2–79): 30 June 2000 (s 2(1) item 2) Sch 1 (items 85–94): 30 June 2001 (s 2(1) items 3–5) Sch 1 (items 95–99): 24 Oct 2002 (s 2(1) item 6) Sch 1 (item 100): 19 Dec 2002 (s 2(1) item 7) Sch 1 (items 101–104) and Sch 10 (items 23–29, 30–42): 30 June 2003 (s 2(1) items 8, 9, 24–26) Sch 1 (items 105, 106): 17 Dec 2003 (s 2(1) item 10) Sch 10 (items 3–22): 29 June 2002 (s 2(1) item 23)

s 715-230 — No reductions or other consequences for interests subject to loss cancellation under Subdivision 715 ‑ H

If section 715 ‑ 610 reduces a loss that would otherwise be * realised for income tax purposes by a * realisation event that happens to an interest in, or a debt owed by, a company, sections 165 ‑ 115ZA and 165 ‑ 115ZB do not apply (and are taken never to have applied) to the interest or debt, in relation to an * alteration time that happened for the company during the ownership period referred to in subsection 715 ‑ 610(2). Note 1: Section 715 ‑ 610 is about cancelling a loss on a realisation event for certain kinds of interests in a member of a consolidated group. Note 2: Sections 165 ‑ 115ZA and 165 ‑ 115ZB are about the consequences that an alteration time for a loss company has for relevant equity interests and relevant debt interests in the company.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23) | Amended by No 56 of 2010, effective s. 4, Schedule 3 (items 2–7, 10(1)–(4)), Schedule 4, Schedule 5 (items 1–3, 3A, 3B, 4–53, 55–72, 78–110, 112–129, 131–136, 141–146, 146A, 147, 148, 148A, 149, 150, 150A–150F, 151–188, 193–220) and Schedule 6 (items 1–11, 19–26, 56, 57, 115, 127–155): 3 June 2010 Schedule 2 (items 2, 4): 4 June 2010 Sch 5 (item 111): 26 Mar 2009 (s 2(1) item 11B)

s 715-240 — Application of sections 715 ‑ 245 to 715 ‑ 260

Sections 715 ‑ 245 to 715 ‑ 260 affect how Subdivision 165 ‑ CD (about reductions after alterations in ownership or control of loss company) applies to a company (the leaving entity ) at and after the time (the leaving time ) when it ceases to be a * subsidiary member of a * consolidated group that came into existence at a particular time (the formation time ). Note: If a trust ceases to be a subsidiary member of a consolidated group: see section 715 ‑ 270.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 715-245 — If ownership or control of leaving entity has altered since head company’s last alteration time or formation of group

(1) This section applies if the leaving time would be an * alteration time for the leaving entity if: (a) the reference time under subsection 165 ‑ 115L(2) or 165 ‑ 115M(2) were: (i) if at least one alteration time has occurred in relation to the * head company of the * consolidated group since the formation time and before the leaving time—the time just after the most recent such alteration time; or (ii) otherwise—the formation time; and (b) the additional assumptions in section 715 ‑ 290 were made. (2) The leaving time is an alteration time for the leaving entity. Note: One consequence of this is that the reference time for working out the leaving entity’s next alteration time is the time just after the leaving time. (3) The leaving entity is a loss company at that * alteration time if, and only if, it has an * adjusted unrealised loss at that time. If so, that adjusted unrealised loss is the leaving entity’s overall loss at that time. Note 1: Subsection (4) affects how the leaving entity works out its adjusted unrealised loss at the leaving time in some cases. Note 2: If the leaving entity is a loss company at the leaving time, section 715 ‑ 255 provides for the consequences. (4) If the leaving entity uses the * individual asset method of working out its * adjusted unrealised loss at that * alteration time, then for the purposes of: (a) step 1 of the method statement in subsection 165 ‑ 115U(1); and (b) the method statement in subsection 165 ‑ 115W(1); the leaving entity is taken to have had no earlier alteration time.

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)

s 715-250 — If head company has had an alteration time but ownership and control of leaving entity have not altered since

(1) This section applies if: (a) at least one * alteration time has occurred in relation to the * head company of the * consolidated group since the formation time and before the leaving time; and (b) the leaving time is not an * alteration time for the leaving entity under subsection 715 ‑ 245(2). (2) The leaving time is an alteration time for the leaving entity. (3) However, for the purposes of determining when the leaving entity’s next * alteration time happens, the reference time under subsection 165 ‑ 115L(2) or 165 ‑ 115M(2) is the time just after the most recent alteration time for the * head company before the leaving time. (4) The leaving entity is a loss company at the leaving time if, and only if, the * head company would have had an * adjusted unrealised loss at the most recent * alteration time (the head company alteration time ) for the head company before the leaving time if that adjusted unrealised loss (if any) were worked out on the basis that: (a) the head company chooses whether the * individual asset method or the * global method is used; and (b) a * CGT asset is taken into account only if: (i) the head company owned it at the head company alteration time; and (ii) it becomes a CGT asset of the leaving entity at the leaving time because subsection 701 ‑ 1(1) (the single entity rule) ceases to apply to the entity; and (c) if the individual asset method is used, then for the purposes of: (i) step 1 of the method statement in subsection 165 ‑ 115U(1); and (ii) the method statement in subsection 165 ‑ 115W(1); the head company had no earlier alteration time. (5) If the leaving entity is a * loss company at the leaving time, its overall loss at that time is the * adjusted unrealised loss worked out under subsection (4).

Amendment history: Inserted by No 16 of 2003, effective s 4: 11 Apr 2003 (s 2(1) item 1) Sch 1 (items 1–6, 9–26), Sch 2, 3, Sch 4 (items 1–7), Sch 5 (items 2–5), Sch 6 (items 1–9), Sch 7 (items 1, 2, 4–29), Sch 8, Sch 9 (items 1, 2, 13–21), Sch 10 (item 2), Sch 11 (items 1–3), Sch 12, 13, Sch 14 (items 1–7), Sch 16 (items 1–3), Sch 19 (items 1–3), Sch 21, 22, Sch 23 (items 10–13) and Sch 24 (items 20–23): 24 Oct 2002 (s 2(1) items 1A, 2–11, 13, 14) Sch 7 (item 3): ( see Sch 10 (item 224) of Act No. 41, 2005) Sch 25 (items 1–10), Sch 26 (items 1–4, 8), Sch 27 (items 1–19, 21), Sch 28 (items 1–12, 19), Sch 29 (items 12, 13) and Sch 30 (items 1, 2): 29 June 2002 (s 2(1) items 15–19, 21, 23)