Document ID: chunk:federal_register_of_legislation:C2010C00603:clause:1_2:p2
Version: federal_register_of_legislation:C2010C00603
Segment Type: clause
Provision Reference: sch 1 cl 2 (pt 2/5)
Character Range: 31890–34654

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 low‑value pool for the leaving year is reduced by so much of the balance as reasonably relates to the *depreciating asset.

Cost of head company's membership interests in leaving entity etc.

 (5) Sections 701‑15, 701‑40 and 701‑60 and Division 711 have effect as if the *adjustable value of the *depreciating asset for the *head company just before and at the leaving time were such amount as is reasonable, having regard to:
 (a) the reduction described in subsection (4) of this section; and
 (b) the taxable use percentage estimated for the depreciating asset by the head company under section 40‑435.

Note 1: Section 701‑15 provides that, for each membership interest the head company holds in the leaving entity, the interest's tax cost is set just before the leaving time at the interest's tax cost setting amount, which is defined by section 701‑60 as the amount worked out under certain sections of Division 711.

Note 2: Division 711 sets the interest's tax cost setting amount by reference to the head company's terminating value of the asset, which is to be worked out under section 711‑30 by reference to the adjustable value of the asset for the head company just before the leaving time.

Note 3: Section 701‑40 has the effect that the adjustable value of the asset for the leaving entity at the leaving time is the same as the adjustable value of the asset for the head company then.

Depreciating assets arising from expenditure in joining entity's software development pool

716‑340  Depreciating assets arising from expenditure in joining entity's software development pool

 (1) This section modifies the basis on which Subdivision 40‑B and sections 40‑455, 701‑10, 701‑55 and 701‑60 and Division 705 operate if:
 (a) an entity (the joining entity) becomes a *subsidiary member of a *consolidated group at a time (the joining time); and
 (b) the joining entity had incurred before the joining time expenditure that it allocated to a software development pool; and
 (c) some or all of the expenditure is reasonably related to *in‑house software that:
 (i) is a *depreciating asset; and
 (ii) became an asset of the *head company of the consolidated group at the joining time because section 701‑1 (Single entity rule) applied to the joining entity.

Note 1: Subdivision 40‑B allows deductions for the decline in value of a depreciating asset, but only if expenditure on the asset has not been allocated to a software development pool. Section 40‑455 provides for deduction of expenditure allocated