Document ID: chunk:federal_register_of_legislation:C2010C00583:clause:4_1:p3
Version: federal_register_of_legislation:C2010C00583
Segment Type: clause
Provision Reference: sch 4 cl 1 (pt 3/6)
Character Range: 24933–27725

Note: If the partnership becomes a subsidiary member of the group at the joining time, the application of this section is affected by section 713‑235.

 (2) In applying the provisions mentioned in subsection 713‑205(3) in relation to the joining entity:
 (a) work out the *tax cost setting amount for each *partnership cost setting interest in the partnership that the joining entity holds at the joining time, in accordance with section 713‑225; and
 (b) except for the purposes of section 713‑235 (which applies only if the partnership joins the group), do not work out tax cost setting amounts for the assets of the partnership; and
 (c) do not work out tax cost setting amounts for the *membership interests in the partnership held by the joining entity.

Note 1: Because of paragraphs (b) and (c), no amount of allocable cost amount for the joining entity is allocated to the assets of the partnership, or to membership interests in the partnership held by the joining entity.

Note 2: If assets of the partnership are held on revenue account, the related partnership cost setting interests held by the joining entity have their tax cost set at the joining time. However, that tax cost does not alter calculations of the net income or exempt income of the partnership, or of a partnership loss, for the purposes of section 92 of the Income Tax Assessment Act 1936.

713‑225  Tax cost setting amount for partnership cost setting interest

 (1) This section modifies the way in which the *tax cost setting amounts are worked out under Division 705 for the *partnership cost setting interests mentioned in paragraph 713‑220(2)(a).

Partnership cost setting interest takes character of partnership asset—general

 (2) Work out the *tax cost setting amounts for those *partnership cost setting interests as if any partnership cost setting interest that relates to an asset (the underlying partnership asset) of the partnership were an asset of the same kind as the underlying partnership asset.

Note: The kinds of assets mentioned in subsection (2) include the following:

(a) retained cost base assets;

(b) reset cost base assets that are held on revenue account (however, if such assets are trading stock or depreciating assets, the special rule in subsection (4) will apply) or on capital account;

(c) excluded assets (see subsection (3));

(d) current assets (within the meaning of subsection 705‑125(2)).

Example: The partnership has an asset that is Australian currency (which is a retained cost base asset). A partnership cost setting interest of the joining entity in that asset is treated as a retained cost base asset for the purpose of working out the tax cost setting amounts for the joining entity's partnership cost setting interests in the partnership.

Partnership cost