Document ID: chunk:federal_register_of_legislation:C2025C00029:section:2:p4
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 2 (pt 4/66)
Character Range: 6335691–6338435

that is not reasonably related to the in‑house software and that the head company is treated by section 701‑5 as having incurred and allocated to a software development pool because the joining entity did.

Prime cost method of working out decline in value of software
 (4) Subsection 701‑55(2) operates as if the *prime cost method of working out the decline in value of the *in‑house software applied just before the joining time.
Note: This affects the method of working out the decline in value of the software for the head company of the consolidated group.

Effective life of software
 (5) Subdivision 40‑B operates as if the *effective life of the *in‑house software were the period specified for in‑house software in subsection 40‑95(7). Subsection 701‑55(2) is subject to this subsection.

Cost of in‑house software
 (6) Sections 701‑10 and 701‑60 and Division 705 (and section 40‑85, so far as it affects that Division) operate as if the *cost of the *in‑house software were the total amount of the joining entity's expenditure that reasonably related to the software and was allocated to a software development pool.

Earlier decline in value of the in‑house software
 (7) Sections 701‑10 and 701‑60 and Division 705 (and section 40‑85, so far as it affects that Division) operate as if the decline in value, and deductions for the decline in value, of the *in‑house software for a period before the joining time were the amount worked out under subsection (8).
 (8) Work out the amount by:
 (a) working out, for each software development pool to which expenditure relating to the *in‑house software was allocated, the amount of the joining entity's deductions under section 40‑455 that reasonably relates to the software; and
 (b) adding up each of those amounts if there are 2 or more such pools.
Note: Subsections (6), (7) and (8) can affect the working out of the tax cost setting amount for the in‑house software, by affecting the joining entity's terminating value for the software, which section 705‑30 defines as being the adjustable value of the software just before the joining time, and which is relevant to sections 705‑40 and 705‑57 (which may reduce the tax cost setting amount for the software).

Software development pools if entity leaves consolidated group

716‑345  Head company taken not to have incurred expenditure
 (1) This section has effect if:
 (a) an entity (the leaving entity) ceases to be a *subsidiary member of a *consolidated group at a time in an income year (the leaving year); and
 (b) under section 701‑40 (Exit history rule), expenditure is taken to have been allocated by the leaving entity to a software development pool.
Note: Section 701‑40 treats expenditure incurred by the head company of