Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p8
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 8/19)
Character Range: 5854121–5856749

doing of the thing; and
 (ii) the thing is required or permitted to be done, or to cease being done, after the expenditure is incurred; or
 (d) a *right to future income (other than a *WIP amount asset); or
 (e) a *depreciating asset that the joining entity *holds as a result of a *balancing adjustment event mentioned in paragraph 417‑30(2)(b).
Note 1: There are some additional retained cost base assets for a joining entity that is a life insurance company: see Subdivision 713‑L. The tax cost setting amount for those assets is worked out under that Subdivision.
Note 2: The joining entity's right to receive lease payments under a lease is treated as a retained cost base asset in some circumstances (see paragraph 705‑56(3)(b)).

705‑27  Reduction in tax cost setting amount that exceeds market value of certain retained cost base assets
 (1) If:
 (a) a *retained cost base asset of the joining entity is a right to receive a specified amount of such Australian currency, covered by paragraph 705‑25(5)(b); and
 (b) the *market value of the asset is less than the *tax cost setting amount of the asset; and
 (c) the head company makes a *capital gain under *CGT event L3 (disregarding this subsection) as a result of the joining entity becoming a *subsidiary member of the group;
reduce the tax cost setting amount of the asset by the amount of the gain (but not below zero).
Note: Reducing the tax cost setting amount of the asset will also reduce the amount of the capital gain (see paragraph 104‑510(1)(b)). The amount of the capital gain might be reduced to nil.
 (2) If:
 (a) the requirements in subsection 701‑58(1) (intra‑group assets) are satisfied in relation to the asset; and
 (b) the joining entity has been entitled to a deduction for an income year ending on or before the joining time because of the *market value of the asset being less than the specified amount mentioned in paragraph (1)(a); and
 (c) the accounting liability that corresponds to the asset has not been reduced under subsection 705‑75(2);
reduce the amount of the reduction under subsection (1) by the amount of the deduction (but not below zero).
 (3) If the *tax cost setting amount of 2 or more of the joining entity's assets could be reduced in accordance with subsections (1) and (2):
 (a) subsections (1) and (2) apply sequentially to each of those assets; and
 (b) the *head company may choose the sequence of assets to which subsections (1) and (2) apply; and
 (c) if the head company does not make such a choice—subsections (1) and (2) apply sequentially to each of those assets according to the time at which they were created,