Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p85
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 85/95)
Character Range: 5766378–5768850

company of assets consisting of certain liabilities owed by entity that leaves group
 (1) If the entity ceases to be a *subsidiary member of the group, this section has effect for the head company core purposes, so far as they relate to the income year in which the entity ceases to be a subsidiary member or any later income year.

Assets to which section applies
 (2) This section applies in relation to each asset, consisting of a liability owed by the entity, that becomes an asset of the *head company because subsection 701‑1(1) (the single entity rule) ceases to apply to the entity when it ceases to be a *subsidiary member. This is a liability that, ignoring that subsection, is owed to a *member of the group.

Object
 (3) The object of this section is to set a cost for the asset to enable income tax consequences for the *head company in respect of the asset to be determined.

Setting tax cost of assets
 (4) The asset's *tax cost is set at the time the entity ceases to be a *subsidiary member of the group at the asset's *tax cost setting amount.
Note: If the entity is a partnership, Subdivision 713‑E sets the tax cost of assets consisting of a partner's share of a liability owed by the partnership to a member of the group.

701‑25  Tax‑neutral consequence for head company of ceasing to hold assets when entity leaves group
 (1) If the entity ceases to be a *subsidiary member of the group, this section has effect for the head company core purposes, so far as they relate to the income year in which the entity ceases to be a subsidiary member or any later income year.

Assets to which section applies
 (2) This section applies in relation to an asset if:
 (a) either:
 (i) the asset is *trading stock of the *head company; or
 (ii) the asset is a *registered emissions unit and an asset of the head company; and
 (b) the asset becomes an asset of the entity because subsection 701‑1(1) (the single entity rule) ceases to apply to the entity when it ceases to be a *subsidiary member of the group; and
 (c) the asset is not again an asset of the head company at or before the end of the income year.

Object
 (3) The object of this section is to ensure that there is no income tax consequence for the *head company in respect of the asset.
Note: In the case of assets other than trading stock or registered emissions units, the fact that the head company ceases to hold them when the single entity rules ceases to apply to them would not constitute a