Document ID: chunk:federal_register_of_legislation:C2010C00604:clause:16_5:p5
Version: federal_register_of_legislation:C2010C00604
Segment Type: clause
Provision Reference: sch 16 cl 5 (pt 5/6)
Character Range: 270421–273156

that other entity; and

(c) provisions operating if an entity is interposed between the head company and another entity operate even if the first entity is actually interposed between a transitional foreign‑held subsidiary and the other entity.

Note 2: If the transitional foreign‑held entity is a transitional foreign‑held subsidiary, this section means the assets of the entity do not have their tax cost reset at the formation time. This is because Subdivision 705‑A of the Income Tax Assessment Act 1997, in its application in accordance with Subdivision 705‑B of that Act, resets the tax cost of assets of subsidiary members of a group, but not assets of the head company.

Other modifications

701C‑35  Trading stock value not set for assets of transitional foreign‑held subsidiaries

  Subsection 701‑35(4) of the Income Tax Assessment Act 1997 (setting value of trading stock at tax‑neutral amount) does not apply to the assets of the transitional foreign‑held entity if it is a transitional foreign‑held subsidiary.

701C‑40  Cost setting rules for exit cases—modification of core rules

  Section 701‑15 of the Income Tax Assessment Act 1997 applies as if the following subsection were added at the end of the section:

Application to transitional foreign‑held subsidiaries

 (4) If an entity that ceases to be a subsidiary member is a transitional foreign‑held subsidiary when it does so:
 (a) this section applies to each membership interest in the transitional foreign‑held subsidiary that is held by an entity (an eligible non‑resident) of a kind mentioned in subparagraph 701C‑20(b)(i), (ii), (iii) or (iv) of the Income Tax (Transitional Provisions) Act 1997 in the same way as it applies to a membership interest in the transitional foreign‑held subsidiary that is held by the head company; and
 (b) for that purpose, the definition of head company core purposes in subsection 701‑1(2) of the Income Tax Assessment Act 1997 applies to the eligible non‑resident in the same way as it applies to the head company.

701C‑50  Cost setting rules for exit cases—reference to modification of core rule

  Section 711‑5 of the Income Tax Assessment Act 1997 applies as if the following note were added at the end of the section:

Note: If the leaving entity is a transitional foreign‑held subsidiary (within the meaning of section 701C‑20 of the Income Tax (Transitional Provisions) Act 1997), this Division will, in accordance with subsection 701‑15(4) of this Act (see section 701C‑40 of the first‑mentioned Act), apply to membership interests that an eligible non‑resident mentioned in that subsection holds in the entity in the same way as it applies to membership interests that the head company holds in the entity.