Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 716.70

  (1)   This section applies if, apart from this Part, an entity could deduct for a single income year the whole of an amount (the original amount ) of capital expenditure by the entity.

  (2)   If for some but not all of an income year an entity is a * subsidiary member of a * consolidated group or * MEC group, and:

  (a)   the * head company of the group could have deducted the original amount for that income year if the entity had been a subsidiary member of the group throughout that income year; but

  (b)   the entity could have deducted the original amount for that income year if throughout that income year the entity had not been a subsidiary member of any consolidated group or MEC group;

the head company can deduct for that income year a proportion of the original amount.

Note 1:   Examples of when paragraphs   (2)(a) and (b) could be satisfied are set out in note 1 to subsection   716 - 15(2).

Note 2:   If the entity is a subsidiary member of the group throughout the income year, the head company can deduct the original amount for the income year, either:

•   because the head company is the entity referred to in subsection   (1) of this section; or

•   because of section   701 - 1 (Single entity rule); or

•   because of section   701 - 5 (Entry history rule).

  (3)   The proportion is worked out by multiplying the original amount by:

•   the number of days that are in the * spreading period, and on which the entity was a * subsidiary member of the group;

divided by:

•   the number of days that are in the spreading period.

Entity's deduction for a non - membership period

  (4)   If:

  (a)   for some but not all of an income year, an entity is a * subsidiary member of a * consolidated group or * MEC group; and

  (b)   the entity could have deducted the original amount for that income year if throughout that income year the entity had not been a subsidiary member of any consolidated group or MEC group;

the entity can deduct a proportion of the original amount for a part of the income year that is a non - membership period for the purposes of section   701 - 30.

Note 1:   Section   701 - 30 is about working out an entity's tax position for a period when it is not a subsidiary member of any consolidated group.

Note 2:   If throughout the income year the entity is not a subsidiary member of any consolidated group or MEC group, this section does not affect the entity's ability to deduct the original amount for the income year either:

•   because the entity is the entity referred to in subsection   (1); or

•   because of section   701 - 40 (Exit history rule).

  (5)   The proportion is worked out by multiplying the original amount by:

•   the number of days that are in both the non - membership period and the * spreading period;

divided by:

•   the number of days that are in the spreading period.

Spreading period

  (6)   The spreading period for the original amount:

  (a)   starts when, apart from this Part, an entity would become entitled to deduct the amount for an income year; and

  (b)   ends at the end of the income year.