Document ID: chunk:federal_register_of_legislation:C2010C00690:clause:1_2:p8
Version: federal_register_of_legislation:C2010C00690
Segment Type: clause
Provision Reference: sch 1 cl 2 (pt 8/11)
Character Range: 19093–21676

group, this section has effect for the entity core purposes.

Assets to which section applies

 (2) This section applies in relation to an asset if the asset is *trading stock of the entity just before it becomes a *subsidiary member of the group.

Object

 (3) The object of this section is to ensure that there is no income tax consequence for the entity in respect of the asset.

Note: In the case of assets other than trading stock, the fact that the entity ceases to hold them when the single entity rule begins to apply to them would not constitute a disposal or other event having tax consequences for the entity.

Setting cost of trading stock at tax‑neutral amount

 (4) The *value of the *trading stock at the end of the income year that ends when the entity becomes a *subsidiary member is taken to be equal to:
 (a) if the asset was trading stock of the entity at the start of the income year—the asset's value at that time; or
 (b) if paragraph (a) does not apply and the asset is *livestock that was acquired by natural increase—the *cost of the asset; or
 (c) in any other case—the amount of the outgoing incurred by the entity in connection with the acquisition of the asset;
increased by the amount of any outgoing forming part of the cost of the asset that was incurred by the entity during its current holding of the asset.

701‑40  Exit history rule

 (1) If the entity ceases to be a *subsidiary member of the group, this section has effect for the entity core purposes, so far as they relate to any thing covered by subsection (2) (an eligible asset etc.) after it becomes that of the entity because subsection 701‑1(1) (the single entity rule) ceases to apply to the entity.

Assets, liabilities and businesses covered

 (2) This subsection covers the following:
 (a) any asset;
 (b) any liability or other thing that, in accordance with *accounting standards, or statements of accounting concepts made by the Australian Accounting Standards Board, is a liability;
 (c) any business;
that becomes that of the entity because subsection 701‑1(1) (the single entity rule) ceases to apply to the entity when it ceases to be a *subsidiary member of the group.

Head company history inherited

 (3) Everything that happened in relation to any eligible asset etc. while it was that of the *head company, including because of any application of section 701‑5 (the entry history rule), is taken to have happened in relation to it as if it had been an eligible asset etc. of the entity.

Note 1: If the eligible asset etc. was brought into the group when an entity