Commonwealth Consolidated Acts

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INCOME TAX ASSESSMENT ACT 1997 - SECT 719.170

Modified effect of subsections 705-175(1) and 705-185(1)

             (1)  This section applies if all of the * members of a * MEC group (the acquired group ) become members of another MEC group, or of a * consolidated group, at a particular time (the acquisition time ) as a result of the * acquisition of * membership interests in:

                     (a)  the * head company of the acquired group; and

                     (b)  other entities that were * eligible tier-1 companies of the acquired group just before the acquisition time.

             (2)  Subsections 705-175(1) and 705-185(1) have effect as if a * membership interest in an entity mentioned in paragraph (1)(b) of this section were a membership interest in the * head company of the acquired group.

Note 1:       If the acquiring group is a MEC group, and the head company of the acquired group becomes an eligible tier-1 company of the acquiring group, the assets of the members of the acquired group do not have their tax cost reset at the acquisition time. This is because:

(a)    section 719-160 treats an entity becoming an eligible tier-1 company of the acquiring group as if it were a part of the head company of that group; and

(b)    section 705-185 treats the subsidiary members of the acquired group as part of the head company of the acquired group.

Note 2:       If:

(a)    the acquiring group is a MEC group, but the head company of the acquired group does not become an eligible tier-1 company of the acquiring group; or

(b)    the acquiring group is a consolidated group and the acquired group is a MEC group ;

                   the assets of the members of the acquired group have their tax cost reset at the acquisition time ( section 719-160 does not preclude tax cost resetting in these cases). For the purposes of resetting the tax cost of those assets, section 705-185 treats the subsidiary members of the acquired group as part of the head company of the acquired group.

Guide to Subdivision 719-F



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