(1) The operation of Part 3-90 of the Income Tax Assessment Act 1997 is modified in accordance with this section in relation to each asset of a continuing majority-owned entity that is trading stock just before the entity becomes a subsidiary member of the entity's designated group.
Continuing majority-owned entity to revalue its trading stock under normal provisions
(2) For the entity core purposes:
(a) subsection 701-35(4) of the Income Tax Assessment Act 1997 does not apply in relation to the asset; and
(b) instead, the value of the asset at the end of the income year that ends, or, if section 701-30 of that Act applies, of the income year that is taken by subsection (3) of that section to end, is the value determined in accordance with sections 70-45 to 70-70 of that Act.
For head company, trading stock to be retained cost base asset with tax cost setting amount equal to entity's year-end valuation
(3) For the head company core purposes when the continuing majority-owned entity becomes a subsidiary member of the designated group, the asset is a retained cost base asset whose tax cost setting amount is equal to the value applicable in accordance with paragraph (2)(b).