Document ID: chunk:federal_register_of_legislation:C2014C00749:clause:7_2:p6
Version: federal_register_of_legislation:C2014C00749
Segment Type: clause
Provision Reference: sch 7 cl 2 (pt 6/9)
Character Range: 79277–81938

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) roll‑over relief under section 40‑340 of that Act in a case covered by item 4 of the table in subsection (1) of that section; and
 (b) the cost base or reduced cost base of that asset or any other asset that:
 (i) became an asset of the head company when the transitional group came into existence because subsection 701‑1(1) (the single entity rule) of that Act applies; or
 (ii) was otherwise an asset of the head company at that time;
  differs at that time from what it would have been if the roll‑over had not occurred or there had been no such roll‑over relief;
then Part 3‑90 of the Income Tax Assessment 1997 applies as if the CGT event had not happened.

701‑40  When entity leaves transitional group, head company may choose, for purposes of transitional group's allocable cost amount, to increase terminating values of over‑depreciated assets
 (1) This section applies if an entity ceases to be a subsidiary member of the transitional group and the requirements of subsections (2) to (5) are satisfied.

Asset held at leaving time
 (2) Just before the entity ceases to be a subsidiary member, it must, disregarding subsection 701‑1(1) (the single entity rule) of the Income Tax Assessment Act 1997, hold an asset.

Reduction of asset's tax cost setting amount for over‑depreciation
 (3) When the transitional group came into existence:
 (a) the asset must have become that of the head company of the transitional group because subsection 701‑1(1) of that Act applied in relation to a transitional entity; and
 (b) section 705‑50 of that Act must have reduced by an amount (the reduction amount) the tax cost setting amount for the asset.

Asset held continuously within group
 (4) The asset must, disregarding subsection 701‑1(1) of that Act, have been held at all times by the head company or a subsidiary member of the transitional group from when the transitional group came into existence until the entity ceases to be a subsidiary member of the transitional group.

Head company's advice to leaving entity
 (5) Before the entity ceases to be a subsidiary member of the transitional group, the head company must have advised the entity of the amount that the head company proposes to choose under subsection (6) of this section in relation to the asset.
Note: This information would need to be known by the entity if it later becomes a subsidiary member of another consolidated group and still holds the asset. This is