Document ID: chunk:federal_register_of_legislation:C2024C00267:section:3:p20
Version: federal_register_of_legislation:C2024C00267
Segment Type: section
Provision Reference: s 3 (pt 20/31)
Character Range: 657109–659834

Note 2: The effective life of a notional asset is specified by whichever one of sections 40‑35, 40‑37, 40‑40 and 40‑43 of this Act is relevant to the notional asset.

Choosing to reduce tax cost setting amount of asset
 (8) If:
 (a) a depreciating asset's tax cost setting amount would be greater than the joining entity's terminating value for the asset; and
 (b) the head company of the consolidated group chooses to apply this subsection to the asset;
the asset's tax cost setting amount is reduced so that it equals the terminating value.
Note 1: A consequence of the choice is that subsection (7) applies to the asset.
Note 2: The amount of the reduction is not re‑allocated among other assets.
 (9) Section 705‑55 of the Income Tax Assessment Act 1997 has effect as if subsection (8) of this section were included in section 705‑45 of that Act.
Note: This affects the order of reductions in the asset's tax cost setting amount under subsection (8) of this section and section 705‑40 of the Income Tax Assessment Act 1997.

705‑310  Adjustable value of head company's notional assets

Application
 (1) If:
 (a) section 40‑35, 40‑37, 40‑40 or 40‑43 of this Act treats the head company of the consolidated group as holding a notional asset at the joining time because expenditure is taken under section 701‑5 (Entry history rule) of the Income Tax Assessment Act 1997 to be expenditure of the head company; and
 (b) section 40‑35, 40‑37, 40‑40 or 40‑43 of this Act treated the joining entity as holding a notional asset just before the joining time because of the expenditure;
this section affects the adjustable value of the head company's notional asset.

Object
 (2) The object of this section is to ensure, by reducing the adjustable value of a notional asset of the head company, that the head company cannot get both:
 (a) a deduction for the notional asset reflecting the amount of the expenditure relating to depreciating assets; and
 (b) a deduction for that amount because of the decline in value of those depreciating assets.

Reduction at joining time for expenditure on depreciating assets
 (3) The opening adjustable value of the head company's notional asset for the income year that includes the joining time is so much of the adjustable value of the joining entity's notional asset just before the joining time as does not reasonably relate to any depreciating asset.
Note: This offsets the increases in adjustable value of the head company's depreciating assets under subsection 705‑305(3).

Division 707—Losses for head companies when entities become members etc.

Table of Subdivisions
707‑A Transfer of losses to head company
707‑C Amount of transferred losses that can be utilised
707‑D Special rules