Document ID: chunk:federal_register_of_legislation:C2024C00267:section:3:p16
Version: federal_register_of_legislation:C2024C00267
Segment Type: section
Provision Reference: s 3 (pt 16/31)
Character Range: 647391–650041

have been entitled to the deduction apart from paragraph 701‑55(2)(a) of the Income Tax Assessment Act 1997 operating at any time before the event occurred.
Note: The final entity will be entitled to the deduction apart from paragraph 701‑55(2)(a) of the Income Tax Assessment Act 1997 only if the entity is treated as having depreciated the asset under former Division 42 of that Act, because of section 701‑5 (the entry history rule) of that Act and perhaps also section 701‑40 (the exit history rule) of that Act.
 (3) However, the final entity is not entitled to the deduction if, at a time before the balancing adjustment event occurred:
 (a) the asset became the asset of the head company of a consolidated group because of section 701‑1 (the single entity rule) of the Income Tax Assessment Act 1997 applying when an entity (the joining entity) became a subsidiary member of the group; and
 (b) the tax cost setting amount for the asset was more than the joining entity's terminating value for the asset.
It does not matter whether or not the change in status of the asset described in paragraph (a) of this subsection is the same change as the change in status of the asset described in paragraph (1)(b).
Note: In some cases, section 705‑47 of the Income Tax Assessment Act 1997 reduces the tax cost setting amount for a depreciating asset to the joining entity's terminating value for the asset, so that subsection (3) of this section will not prevent the final entity from getting the further deduction under subsection 40‑285(3) of this Act.

702‑5  Modified application of subsection 40‑285(6) of this Act after entity brings assets into consolidated group
  If:
 (a) an entity becomes a subsidiary member of a consolidated group; and
 (b) because subsection 701‑1(1) (the single entity rule) of the Income Tax Assessment Act 1997 applies, an asset of the entity becomes an asset of the head company of the group; and
 (c) a balancing adjustment event happens in relation to the asset while it is an asset of the head company;
subsection 40‑285(6) of this Act (about reducing the amount included in assessable income for a balancing adjustment event) applies as if the cost of the asset were equal to the tax cost setting amount applicable in relation to the asset for the purposes of having its tax cost set by section 701‑10 (cost to head company of assets that entity brings into group) of the Income Tax Assessment Act 1997.
Note: The tax cost setting amount applicable in relation to the asset for that purpose is worked out in accordance with Division 705 of the Income Tax Assessment Act 1997.

Division 703—Consolidated groups and