Document ID: chunk:federal_register_of_legislation:C2010C00603:clause:1_1:p3
Version: federal_register_of_legislation:C2010C00603
Segment Type: clause
Provision Reference: sch 1 cl 1 (pt 3/5)
Character Range: 67157–69850

provisions

 (7) Section 701‑40 (Exit history rule) and the choice provision have effect subject to this section.

Choices leaving entity can make ignoring exit history rule to overcome inconsistencies

715‑705  Choices leaving entity can make ignoring exit history rule to overcome inconsistencies

Application

 (1) This section has effect if an entity ceases to be a *subsidiary member of a *consolidated group at a time (the leaving time) and there is an inconsistency because either:
 (a) both of these conditions are met:
 (i) a choice (however described) under a provision (the choice provision) listed in the table in subsection 715‑665(1) by the entity had effect just before the entity became a *member of the group;
 (ii) there was not such a choice by the *head company of the group having effect just before the leaving time; or
 (b) both of these conditions are met:
 (i) there was not a choice (however described) under the choice provision by the entity having effect just before the entity became a member of the group;
 (ii) such a choice by the head company had effect just before the leaving time.

Note: An election by the entity or head company under the choice provision is an example of a choice under that provision (even though the provision does not call the election a choice) because the entity or company has chosen to make the election.

Object

 (2) The main objects of this section are:
 (a) to displace section 701‑40 (Exit history rule), so far as it relates to the inconsistency; and
 (b) to allow the entity to make a choice (however described) under the choice provision with effect after the leaving time.

Displacing the exit history rule

 (3) For the entity core purposes set out in section 701‑1 (Single entity rule) relating to income years ending after the leaving time, ignore a choice (however described) made by the *head company of the *consolidated group under the choice provision or the absence of such a choice.

 (4) However, if the choice provision is section 148 of the Income Tax Assessment Act 1936 (Reinsurance with non‑residents):
 (a) subsection (3) of this section does not apply in relation to reinsurance under contracts made before the leaving time (but does apply in relation to reinsurance under contracts made at or after that time); and
 (b) that section applies, for the entity core purposes relating to income years ending after the leaving time, in relation to reinsurance under a contract made before the leaving time:
 (i) as if the entity had made an election under that section, if the *head company of the *consolidated group made, or was treated as having made, such an election that was relevant to working out