Commonwealth Numbered Acts

TAXATION LAWS AMENDMENT ACT (NO. 6) 2003 NO. 67, 2003 - SCHEDULE 3

Income Tax Assessment Act 1997

1 Paragraph 104-510(1)(a) (second occurring)

Repeal the paragraph, substitute:

(b) the sum of the ^* tax cost setting amounts for all ^* retained cost base assets that:
(i) become assets of the ^* head company of the group because subsection 701-1(1) (the single entity rule) applies; and
(ii) are taken into account under paragraph 705-35(1)(b) in working out the tax cost setting amount of each reset cost base asset of the entity;
exceeds the group's ^* allocable cost amount for the entity.
2 Subsection 705-35(1) (after note 1)

Insert:

Note 1A: If a set of linked assets and liabilities includes one or more reset cost base assets, section 705-59 may affect how this section applies. In particular, that section may exclude the application of paragraph 705-35(1)(b) to retained cost base assets in the set; this in turn may affect the application of CGT event L3.

3 After section 705-57

Insert:

(1)

This Part applies separately to each asset and liability even if ^* accounting standards, or statements of accounting concepts made by the Australian Accounting Standards Board, require them to be set off against each other.

(2)

This section has effect subject to section 705-59.

705-59 Exception: treatment of linked assets and liabilities

(1)

This section applies to each set of ^* linked assets and liabilities that the joining entity has immediately before the joining time.

(2)

One or more assets, and one or more liabilities, that an entity has constitute a set of linked assets and liabilities of the entity if, and only if, in accordance with ^* accounting standards, or statements of accounting concepts made by the Australian Accounting Standards Board:

(a) the total of the one or more assets is to be set off against the total of the one or more liabilities in preparing statements of the entity's financial position; and
(b) the net amount after the set-off is to be recognised in those statements.

(3)

If the set consists only of one reset cost base asset for the purposes of section 705-35, and one or more liabilities:

(a) first, work out the total (the available amount ) that, apart from this section and the accounting requirement referred to in subsection (2) of this section, would be taken into account under subsection 705-70(1) (about step 2 in working out the allocable cost amount) for the one or more liabilities; and
(b) next, work out the consequences under this table.

Note: Paragraph 705-35(1)(c) allocates the allocable cost amount (as reduced by the tax cost setting amounts of retained cost base assets) among the joining entity's reset cost base assets.

(4)

If the set consists only of one or more ^* retained cost base assets and one or more liabilities, this section does not affect their treatment.

Note: This is because the tax cost setting amount for a retained cost base asset is worked out without regard to the allocable cost amount.

(5)

In any other case:

(a) first, work out the available amount under paragraph (3)(a); and
(b) next, work out the consequences under this table.

Note 1: Paragraph 705-35(1)(b) reduces the allocable cost amount by the tax cost setting amounts of retained cost base assets. Item 4 of the table in this subsection excludes the application of paragraph 705-35(1)(b) to retained cost base assets in the set; this in turn may affect the application of CGT event L3.

Note 2: Paragraph 705-35(1)(c) then allocates the reduced allocable cost amount among the joining entity's reset cost base assets.

(6)

In applying subsections (3), (4) and (5) of this section, disregard an asset covered by subsection 705-35(2) (assets that do not have a tax cost setting amount).

(7)

This section does not affect the application of sections 705-40, 705-45 and 705-50 (which adjust the tax cost setting amount for a reset cost base asset).

4 Subsection 995-1(1)

Insert: