Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p12
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 12/19)
Character Range: 5863617–5866331

(3) These are the principles:
 (a) the allocation is to be in proportion to the *market values of the assets;
 (b) the amount allocated to an item of *trading stock, to a *depreciating asset, to a *registered emissions unit or to a *revenue asset must not cause its *tax cost setting amount to contravene subsection (1);
 (c) any of the amount that cannot be allocated is to be reallocated, to the maximum extent possible, among the remaining reset cost base assets by applying this subsection a further one or more times.

705‑45  Reduction in tax cost setting amount for accelerated depreciation assets
 (1) If:
 (a) an asset of the joining entity is a *depreciating asset to which Division 40 applies; and
 (aa) just before the entity became a subsidiary member, subsection 40‑10(3) or 40‑12(3) of the Income Tax (Transitional Provisions) Act 1997 applied for the purposes of the joining entity working out the asset's decline in value under Division 40; and
Note: The effect of those subsections was to preserve an entitlement to accelerated depreciation.
 (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.
 (2) If:
 (a) an asset of the joining entity is a *depreciating asset to which Division 40 applies; and
 (b) any of the following has applied before the joining entity became a *subsidiary member for the purposes of working out the asset's decline in value under Division 40:
 (i) section 40‑82;
 (ii) Subdivision 40‑BA of the Income Tax (Transitional Provisions) Act 1997;
 (iii) Subdivision 40‑BB of that Act; and
 (c) the asset's *tax cost setting amount would be greater than the joining entity's *terminating value for the asset;
the asset's tax cost setting amount is reduced so that it equals the terminating value.
Note 1: The provisions referred to in paragraph (b) provide for an accelerated decline in value of certain assets.
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.

705‑47  Reduction in tax cost setting amount for some privatised assets

Object

 (1) The object of this section is to limit appropriately the amount the *head company of the joined group can deduct