Document ID: chunk:federal_register_of_legislation:C2010C00604:clause:7_6:p12
Version: federal_register_of_legislation:C2010C00604
Segment Type: clause
Provision Reference: sch 7 cl 6 (pt 12/14)
Character Range: 161015–163820

rule and entry history rule
715‑450 No reductions or other consequences for interests subject to loss cancellation under Subdivision 715‑H

715‑410  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 Part 3‑95 (Value shifting).

Note: One consequence of this for the operation of Division 727 (about indirect value shifting affecting interests in companies and trusts, and arising from non‑arm's length dealings) is that economic benefits provided by or to a subsidiary member of a consolidated group are treated as provided by or to the head company of the group. As a result:
  *   the head company is the only group member that can be a losing entity or gaining entity for an indirect value shift; and
  *   economic benefits provided by one group member to another are treated as provided by the head company to itself, and so have no relevance to Division 727.

 Another consequence is that the head company is treated as owning all interests owned by group members in a losing entity or gaining entity that is not a group member.

 (2) This section is not intended to limit the effect that subsection 701‑1(1) and section 701‑5 have apart from this section.

[The next section is section 715‑450.]

715‑450  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 *equity or loan interest in an entity:
 (a) the loss is not subject to reduction under Division 723 (Direct value shifting by creating right over non‑depreciating asset) or 727 (Indirect value shifting); and
 (b) the interest's *adjustable value is not, and is taken never to have been, reduced under Division 725 because of a *direct value shift during the ownership period referred to in subsection 715‑610(2); and
 (c) the interest's *adjustable value is not, and is taken never to have been, reduced under Division 727 because of an *indirect value shift during that period.

Note: Section 715‑610 is about cancelling a loss on a realisation event for a direct or indirect interest in a subsidiary member of a consolidated group.

Subdivision 715‑H—Cancelling loss on realisation event for direct or indirect interest in a subsidiary member of a consolidated group

Table of sections

715‑610 Cancellation of loss
715‑615 Exception for interests in entity leaving consolidated group
715‑620 Exception if loss attributable to certain matters

715‑610  Cancellation of loss

 (1) This section reduces to nil a loss that would otherwise be *realised for income tax purposes by a *realisation event that happens to