Document ID: chunk:federal_register_of_legislation:C2024C00267:section:3:p11
Version: federal_register_of_legislation:C2024C00267
Segment Type: section
Provision Reference: s 3 (pt 11/31)
Character Range: 634786–637648

at the time (the formation time) the group comes into existence.

Object
 (2) The object of this Subdivision is to ensure that, on becoming a subsidiary member at the formation time, the tax cost of the assets of any transitional foreign‑held subsidiary is not set and that the tax cost setting amount for assets of any transitional foreign‑held indirect subsidiary that becomes a subsidiary member at that time takes account of this.

Basic modification

701C‑30  Transitional foreign‑held subsidiary to be treated as part of head company
  The following provisions:
 (a) section 701‑10 of the Income Tax Assessment Act 1997 (about setting the tax cost of assets that an entity brings into the group);
 (b) Subdivision 705‑A of that Act, in its application in accordance with Subdivision 705‑B of that Act;
apply, for the purposes of setting the tax cost of an asset of the transitional foreign‑held joining entity at the formation time, as if each subsidiary member of the group that is a transitional foreign‑held subsidiary at the formation time were a part of the head company of the group, rather than a separate entity.
Note 1: This section means that references in those provisions to matters internal to the group operate as if transitional foreign‑held subsidiaries in the group were parts of the head company of the group. For example:
(a) provisions operating if the head company holds (whether directly or indirectly) membership interests in another entity operate even if a transitional foreign‑held subsidiary actually holds those interests; and
(b) provisions operating if the head company owns or controls another entity operate even if one or more transitional foreign‑held subsidiaries actually own or control 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 joining 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 joining 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