Document ID: chunk:federal_register_of_legislation:C2025C00029:section:5:p3
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 5 (pt 3/13)
Character Range: 6092673–6095415

by multiplying all deductions covered by subsection (2) by the *corporate tax rate.
 (2) This subsection covers any deduction to which the leaving entity becomes entitled under section 701‑40 as a result of the leaving entity ceasing to be a *subsidiary member of the old group, other than a deduction for expenditure:
 (a) that is, forms part of or reduces, the cost of an asset that becomes an asset of the leaving entity because subsection 701‑1(1) (the single entity rule) ceases to apply; or
 (b) to which section 110‑40 (about expenditure on assets acquired before 7.30 pm on 13 May 1997) applies.
 (3) Subsection (2) does not cover a deduction under section 43‑15 (which relates to *undeducted construction expenditure) if, because of section 701‑40 (the exit history rule), the leaving entity is taken to have *acquired the asset to which the deduction relates at or before 7.30 pm, by legal time in the Australian Capital Territory, on 13 May 1997.

711‑40  Liabilities owed to the leaving entity by members of the old group—step 3 in working out allocable cost amount
  For the purposes of step 3 in the table in subsection 711‑20(1), the step 3 amount is the total, for all liabilities owed by *members of the old group to the leaving entity at the leaving time, of the *tax cost setting amounts of the corresponding assets of the leaving entity.
Note: The tax cost of a corresponding asset of the leaving entity is set under section 701‑45. The tax cost setting amount of the corresponding asset is determined under section 701‑60A.

711‑45  Liabilities etc. owed by the leaving entity—step 4 in working out allocable cost amount
 (1) For the purposes of step 4 in the table in subsection 711‑20(1), the step 4 amount is worked out by adding up the amounts of each thing (an accounting liability) that, in accordance with the leaving entity's *accounting principles for tax cost setting, is a liability of the leaving entity just before the leaving time.

Leaving entity's accounting principles for tax cost setting
 (1A) The leaving entity's accounting principles for tax cost setting are the *accounting principles that the group would use if it were to prepare its financial statements just before the leaving time (disregarding subsection 701‑1(1) (the single entity rule)).

Exclusion for deferred tax liability
 (1B) An amount is not to be added for an accounting liability that is an amount recorded in a deferred tax liability account in accordance with the leaving entity's *accounting principles for tax cost setting.
 (1C) Subsection (1B) does not apply to an accounting liability that relates to an asset mentioned in paragraph 713‑575(2)(a) or (b) (certain assets of life insurance company).

Exclusion where transfer