Document ID: chunk:federal_register_of_legislation:C2010C00605:clause:9_2:p4
Version: federal_register_of_legislation:C2010C00605
Segment Type: clause
Provision Reference: sch 9 cl 2 (pt 4/5)
Character Range: 135838–138436

ceases to be a subsidiary member

 (5) If:
 (a) the asset becomes that of an entity (a new asset holder) other than the head company because subsection 701‑1(1) of the Income Tax Assessment Act 1997 ceases to apply when the entity ceases to be a subsidiary member of the designated group as a result of a third entity (the buyer of the new asset holder) acquiring some or all of the membership interests in the new asset holder; and
 (b) at the time of the acquisition:
 (i) the buyer of the new asset holder controls (for value shifting purposes) the head company of the designated group, or vice versa; or
 (ii) a third entity controls (for value shifting purposes) the head company of the designated group and the buyer of the new asset holder; and
 (c) the following amount:
 (i) the asset's adjustable value (the roll‑over adjustable value) just before the cessation, worked out on the assumption that the head company had acquired the asset for an amount equal to the continuing majority‑owned entity's terminating value for the asset;
  is less than:
 (ii) the asset's cost to the new asset holder;
then the consequences in subsection (6) occur.

 (6) The consequences are as follows:
 (a) while the asset is held by the new asset holder, for the purpose of working out deductions for the asset's decline in value under Division 40 of the Income Tax Assessment Act 1997, the acquisition by the new asset holder is taken to have been for an amount equal to the asset's roll‑over adjustable value; and
 (b) if a balancing adjustment event occurs for the asset and:
 (i) the deductions for its decline in value up to that time worked out on the basis in paragraph (a);
  are less than:
 (ii) the deductions that would otherwise have been worked out;
  then the shortfall is allowable as a deduction to the new asset holder for the income year in which it ceases to hold the asset.

Reduced depreciation deductions etc. for later acquirer

 (7) If:
 (a) the asset is acquired by another entity (a new asset holder) from an entity that is a new asset holder under subsection (3) or (5) or a previous application of this subsection; and
 (b) an entity:
 (i) was a party to the acquisition and, at the time of the acquisition, controlled (for value shifting purposes) the other party; or
 (ii) was not a party to each acquisition but, at the time of the acquisition, controlled (for value shifting purposes) the parties to the acquisition; and
 (c) that entity was also the entity whose control (for value shifting purposes) resulted in the control test being satisfied in respect of each previous