Document ID: chunk:federal_register_of_legislation:C2010C00690:clause:1_2:p4
Version: federal_register_of_legislation:C2010C00690
Segment Type: clause
Provision Reference: sch 1 cl 2 (pt 4/11)
Character Range: 9894–12436

company because subsection 701‑1(1) (the single entity rule) applies.

Object

 (3) The object of this section (and Division 705 which relates to it) is to recognise the cost to the *head company of such assets as an amount reflecting the group's cost of acquiring the entity.

Setting tax cost of assets

 (4) Each asset's *tax cost is set at the time the entity becomes a *subsidiary member of the group at the asset's *tax cost setting amount.

Multiple setting of tax cost for same trading stock

 (5) However, if:
 (a) the asset is *trading stock; and
 (b) the asset's *tax cost is set by this section at more than one time (each of which is a setting time) for the same income year;
then, except where subsection (6) applies, only the amount at which the tax cost is set at the last of the setting times is to be taken into account.

 (6) If:
 (a) the *head company's *terminating value for the asset; or
 (b) the *value of the asset at the start of the income year;
is required to be worked out for one or more occasions when an entity (whether or not the same entity) ceases to be a *subsidiary member of the group in the income year, then the amount at which the asset's *tax cost is set by this subsection at a particular setting time is only taken into account in working out the head company's terminating value for a particular occasion if:
 (c) the setting time occurs before the occasion; and
 (d) there is no intervening setting time or occasion.

Excluded assets

 (7) If an asset is an excluded asset under subsection 705‑35(2), its *tax cost is not set.

Note: Excluded assets are assets such as entitlements to tax deductions.

701‑15  Cost to head company of membership interests in entity that leaves group

 (1) If the entity ceases to be a *subsidiary member of the group, this section has effect for the head company core purposes, so far as they relate to the income year in which the entity ceases to be a subsidiary member or any later income year. However, this section does not have effect if the entity ceases to be a subsidiary member where Subdivision 705‑C (about the group joining another consolidated group) has effect.

Note: This section could have effect, for example, if an entity ceases to be a subsidiary member of the group because:

(a) it ceases to satisfy the requirements to be a subsidiary member; or

(b) the head company ceases to satisfy the requirements to be a head company (thereby bringing the group to an end).

Object

 (2) The object of this section is to preserve the alignment