Document ID: chunk:federal_register_of_legislation:C2010C00603:clause:1_2:p1
Version: federal_register_of_legislation:C2010C00603
Segment Type: clause
Provision Reference: sch 1 cl 2 (pt 1/5)
Character Range: 29324–32134

2                                                                  In another day                                            The *closing pool balance for the joining entity's low‑value pool for the non‑membership period described in section 701‑30 that ends just before the joining time

Note: Sections 705‑40 and 705‑57 are about reduction of an asset's tax cost setting amount to an amount that may be affected by the joining entity's terminating value for the asset.

 (9) Division 705 operates in relation to the hypothetical asset as if section 705‑50 had not been enacted.

Note: Section 705‑50 is about reduction of an asset's tax cost setting amount for over‑depreciation of the asset.

Entity leaving group with asset allocated to head company's low‑value pool

716‑335  Entity leaving group with asset allocated to head company's low‑value pool

 (1) This section sets out rules affecting the *head company of a *consolidated group and an entity (the leaving entity) that ceases to be a *subsidiary member of the group at a time (the leaving time) in an income year (the leaving year), if:
 (a) a *depreciating asset becomes an asset of the leaving entity at the leaving time because section 701‑1 (Single entity rule) ceases to apply to the leaving entity; and
 (b) the asset was in the head company's low‑value pool.

Note: Section 701‑40 (Exit history rule) treats the asset as having been allocated to the leaving entity's low‑value pool, with the taxable use percentage estimated by the head company, for the income year for which the head company allocated the asset to the head company's low‑value pool.

Objects

 (2) The main objects of this section are:
 (a) to ensure that the decline in value of assets in the *head company's low‑value pool and the decline in value of assets in the leaving entity's low‑value pool are worked out so that:
 (i) for the leaving year, the *depreciating asset is taken into account in working out the decline in value of assets in the head company's low‑value pool only; and
 (ii) for later income years, the depreciating asset is taken into account in working out the decline in value of assets in the leaving entity's low‑value pool only; and
 (b) to specify the *adjustable value of the depreciating asset just before and at the leaving time.

Reduced decline in value for leaving entity for leaving year

 (3) The decline in value worked out for the leaving year under subsection 40‑440(1) for assets in the leaving entity's low‑value pool is reduced by such amount as is reasonable to prevent duplication of deductions for the leaving year in respect of the *depreciating asset by the *head company and the leaving entity.

Reduced closing pool balance for head company's pool for leaving year

 (4) The *closing pool balance of the *head company's