Document ID: chunk:federal_register_of_legislation:C2014C00749:clause:7_2:p5
Version: federal_register_of_legislation:C2014C00749
Segment Type: clause
Provision Reference: sch 7 cl 2 (pt 5/9)
Character Range: 76778–79504

entity in the transitional group, other than a chosen transitional entity. This is so even if there are no chosen transitional entities at all.

Increase in step 3 of allocable cost amount on group formation
 (2) The amount to be added under section 705‑90 (step 3 of allocable cost amount) of the Income Tax Assessment Act 1997 in working out the transitional group's allocable cost amount for the transitional entity is increased by the additional undistributed profits (the step 3 unfrankable profits increase) that would form part of the step 3 amount under that section if:
 (a) subsections (3) and (4), and paragraph (6)(b), of that section were disregarded; and
 (b) it were a requirement of that section that, if any additional undistributed profits resulting from paragraph (a) of this subsection were distributed as dividends just before the group came into existence, the head company and each other transitional entity interposed between the head company and the transitional entity would be entitled to a rebate of income tax under section 46 or 46A of the Income Tax Assessment Act 1936 on the dividends.

Increase in tax deferral amount in relation to over‑depreciated assets
 (3) The tax deferral amount for the purposes of applying section 705‑50 (reduction in tax cost setting amount for over‑depreciated assets) of the Income Tax Assessment Act 1997 in relation to an asset of the transitional entity that becomes that of the head company under subsection 701‑1(1) (the single entity rule) of that Act when the transitional group comes into existence is increased by the amount worked out under subsection (4) of this section.

Amount of increase in tax deferral amount
 (4) The increase is equal to the amount that would have been the step 3 unfrankable profits increase if the undistributed profits constituting that increase were also required to satisfy the following requirements:
 (a) the profits were not subject to income tax because of deductions for the asset's decline in value;
 (b) the decline in value represented the over‑depreciation of the asset;
 (c) the deductions for the decline in value do not form part of a tax loss covered by the step 5 amount mentioned in step 5 in the table in section 705‑60 of the Income Tax Assessment Act 1997 in working out the transitional group's allocable cost amount for the transitional entity.

701‑35  CGT event for pre‑formation roll‑over after 16 May 2002 to be disregarded if cost base etc. would be different
  If:
 (a) after 16 May 2002 and before the transitional group came into existence, a CGT event happened in relation to an asset for which there was:
 (i) a roll‑over under Subdivision 126‑B of the Income Tax Assessment Act 1997; or
 (ii)