Document ID: chunk:federal_register_of_legislation:C2010C00690:clause:1_3:p7
Version: federal_register_of_legislation:C2010C00690
Segment Type: clause
Provision Reference: sch 1 cl 3 (pt 7/9)
Character Range: 80230–82946

disposal would be taken into account in determining the taxable income or *tax loss of the head company, but any *capital gain or *capital loss on the disposal would be disregarded.

Note: For example, trading stock and depreciating assets.

Allocation of excess

 (3) If there is an excess under subsection (1), it is allocated among the other reset cost base assets (whether or not revenue assets) other than excluded assets, so as to increase their *tax cost setting amounts, in accordance with the following principles:
 (a) the allocation is to be in proportion to the *market values of the assets;
 (b) the amount allocated to a revenue asset must not cause its tax cost setting amount to breach the limit imposed by subsection (1);
 (c) any of the excess that cannot be so allocated is to be reallocated, to the maximum extent possible, among the remaining reset cost base assets (other than excluded assets) by applying this subsection a further one or more times.

Note: If any of the excess cannot be allocated, it is instead treated as a capital loss of the head company.

705‑45  Reduction in tax cost setting amount for accelerated depreciation assets

  If:
 (a) the joining entity *acquired a *depreciating asset at or before 11.45 am, by legal time in the Australian Capital Territory, on 21 September 1999 and held it continuously until the joining time; and
 (b) the asset's *tax cost setting amount would be greater than the joining entity's *terminating value for the asset; and
 (c) the *head company chooses to apply this section to the asset;
the asset's tax cost setting amount is reduced so that it equals the terminating value.

Note 1: A consequence of the choice is that accelerated depreciation will apply to the asset: see section 701‑80.

Note 2: Unlike the position with a reduction in tax cost setting amount under section 705‑40, the amount of the reduction is not re‑allocated among other assets.

705‑50  Reduction in tax cost setting amount for over‑depreciated assets

Object

 (1) The object of this section is to limit deferral of tax on profits that were not subject to tax because of *over‑depreciation of assets and were distributed to recipients untaxed because of their entitlement to the intercorporate dividend rebate.

Reduction by amount of tax deferral resulting from over‑depreciation

 (2) If:
 (a) the *tax cost setting amount for an asset that is *over‑depreciated at the joining time would be more than the joining entity's *terminating value for the asset; and
 (b) before the joining time, the joining entity paid one or more unfranked or partly franked dividends to recipients entitled to a rebate of income tax under section 46 or 46A of the Income Tax