Document ID: chunk:federal_register_of_legislation:C2010C00648:clause:2_67:p2
Version: federal_register_of_legislation:C2010C00648
Segment Type: clause
Provision Reference: sch 2 cl 67 (pt 2/3)
Character Range: 140840–143544

may, for example, have indirectly affected the amount the joining entity could deduct for the asset because:

(a) that section, Subdivision or Division affected the amount that could be deducted by an entity that held the asset before the joining entity and that effect extended to the joining entity because of a previous application of this subsection, roll‑over relief or section 701‑40 (the exit history rule); or

(b) this subsection affected the amount the joining entity could deduct for the asset (either directly or because of section 701‑40).

Note 3: Subsection (2) has effect even if, just before the joining time, the joining entity was:

(a) an exempt Australian government agency; or

(b) another entity whose ordinary income and statutory income were exempt from income tax.

This is because section 715‑900 causes Division 58 to apply as if, just before the joining time, the joining entity's ordinary income or statutory income had become assessable income to some extent.

Exception to reduction of tax cost setting amount

 (3) Subsection (2) does not apply if:
 (a) just before the joining time, the joining entity was neither an *exempt Australian government agency nor another entity whose *ordinary income and *statutory income were exempt from income tax; and
 (b) a condition in subsection (4) or (5) is met in relation to the period (the pre‑joining taxable period) between the last time for which the condition in paragraph (2)(a) is met and the joining time.

 (4) One condition for subsection (2) not to apply is that an amount was included in an entity's assessable income, or an entity could deduct an amount, because of a *balancing adjustment event that occurred for the asset during the pre‑joining taxable period.

 (5) Another condition for subsection (2) not to apply is that:
 (a) for at least some of the pre‑joining taxable period, the asset was *held by the *head company of a *consolidated group (the earlier group) for the period (the earlier group period):
 (i) starting when (and because) an entity that had previously held the asset became a *subsidiary member of the earlier group or when the asset started to be held by that company because of an asset sale situation described in subsection 58‑5(4) involving a *member of the earlier group as the purchaser mentioned in that subsection; and
 (ii) ending when (and because) an entity ceased to be a subsidiary member of the earlier group or when the earlier group ceased to exist; and
 (b) the company that was the head company of the earlier group just before the end of the earlier group period was not:
 (i) an *associate of the head company of the joined group just before the joining time; or
 (ii)