Document ID: chunk:federal_register_of_legislation:C2011C00698:clause:5_4:p1
Version: federal_register_of_legislation:C2011C00698
Segment Type: clause
Provision Reference: sch 5 cl 4 (pt 1/3)
Character Range: 58500–61188

4  After Subdivision 716‑G
Insert:

Subdivision 716‑S—Miscellenous consequences of tax cost setting

Table of sections

716‑400 Tax cost setting and bad debts
716‑405 Tax cost setting and rights to future income—deduction
716‑410 Rights to amounts that are expected to be included in assessable income after joining time

716‑400  Tax cost setting and bad debts

 (1) The object of this section is to clarify the effect of section 701‑5 (entry history rule) and subsection 701‑55(6) in relation to an asset that may give rise to a bad debt. It achieves this object by clarifying that certain things are taken to have happened in relation to the asset through the operation of section 701‑5 and subsection 701‑55(6).

 (2) This section applies if:
 (a) the tax cost of an asset was set at the time (the joining time) an entity (the joining entity) became a subsidiary member of a *consolidated group at the asset's tax cost setting amount; and
 (b) the asset is a debt; and
 (c) any of the following apply:
 (i) the debt was included in the joining entity's assessable income before the joining time;
 (ii) the debt was in respect of money that the joining entity lent before the joining time in the ordinary course of a business of lending money;
 (iii) the joining entity bought the debt before the joining time in the ordinary course of a business of lending money; and
 (d) the requirements in subsection 701‑58(1) (intra‑group assets) are not satisfied in relation to the asset.

 (3) To avoid doubt, in determining the extent to which the *head company of the group can deduct an amount under section 25‑35 (bad debts) in relation to the asset, section 701‑5 (entry history rule) and subsection 701‑55(6) have the effect that, before the joining time:
 (a) in a case covered by subparagraph (2)(c)(i)—the head company included an amount equal to the tax cost setting amount in its assessable income in respect of the debt; or
 (b) in a case covered by subparagraph (2)(c)(ii)—the head company lent an amount of money in respect of the debt equal to the tax cost setting amount in the ordinary course of a business of lending money; or
 (c) in a case covered by subparagraph (2)(c)(iii)—the head company incurred expenditure equal to the tax cost setting amount in buying the debt in the ordinary course of a business of lending money.

716‑405  Tax cost setting and rights to future income—deduction

 (1) This section applies if:
 (a) an entity (the joining entity) became a subsidiary member of a *consolidated group at a time (the joining time); and
 (b) subsection 701‑55(5C) applies in relation to the asset at the joining time.

Note: Subsection 701‑55(5C) deals with assets