Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p2
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 2/10)
Character Range: 5795310–5797940

not section 701‑58 applied in relation to the setting of that tax cost).

701‑61  Assets in relation to Division 230 financial arrangement—head company's assessable income or deduction
 (1) This section applies if:
 (a) an entity (the joining entity) becomes a *subsidiary member of a *consolidated group; and
 (b) paragraph 701‑55(5A)(b) applies in relation to one or more assets of the joining entity.
 (2) Work out if the total of the *Division 230 starting values for those assets exceeds or falls short of the total of their *tax cost setting amounts.
 (3) If there is an excess, an amount equal to 25% of that excess is included in the *head company's assessable income for:
 (a) the income year in which the particular time mentioned in subsection 701‑55(5A) occurs; and
 (b) each of the 3 subsequent income years.
 (4) If there is a shortfall, the *head company is entitled to a deduction equal to 25% of that shortfall for:
 (a) the income year in which the particular time mentioned in subsection 701‑55(5A) occurs; and
 (b) each of the 3 subsequent income years.

701‑63  Right to future income and WIP amount asset
 (5) A right to future income is a valuable right (including a contingent right) to receive an amount if:
 (a) the valuable right forms part of a contract or agreement; and
 (b) the *market value of the valuable right (taking into account all the obligations and conditions relating to the right) is greater than nil; and
 (c) the valuable right is neither a *Division 230 financial arrangement nor a part of a Division 230 financial arrangement; and
 (d) it is reasonable to expect that an amount attributable to the right will be included in the assessable income of any entity at a later time.
 (6) WIP amount asset means an asset that is in respect of work (but not goods) that has been partially performed by a recipient mentioned in paragraph 25‑95(3)(b) for a third entity but not yet completed to the stage where a recoverable debt has arisen in respect of the completion or partial completion of the work.

701‑65  Net income and losses for trusts and partnerships

Net income of partnerships and trusts
 (1) If:
 (a) another provision of this Division applies for the purpose of:
 (i) working out the amount of the entity's liability (if any) for income tax calculated by reference to an income year; or
 (ii) working out the amount of the entity's taxable income for an income year; and
 (b) the entity is a trust or partnership;
the provision instead applies in a corresponding way for the purpose of working out the amount of the entity's net income, as defined in the Income Tax Assessment