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INCOME TAX (TRANSITIONAL PROVISIONS) ACT 1997 - SECT 701B.1

Modified application of CGT Consolidation provisions to allow immediate availability of capital loss for CGT event L1

             (1)  This section applies if:

                     (a)  CGT event L1 happens; and

                     (b)  members of the consolidated group or the MEC group mentioned in subsection 104-500(1) of the Income Tax Assessment Act 1997 held all of the membership interests in the entity mentioned in that subsection from the end of 30 June 2002 until the entity became a subsidiary member of the group; and

                     (c)  before the end of the fourth income year of the head company of the group ending after the entity became a subsidiary member of the group, the entity ceases to be a subsidiary member; and

                     (d)  all of the assets, other than those excepted under subsection (2), that the head company held when the entity became a subsidiary member, because the entity was taken by subsection 701-1(1) (the single entity principle) of the Income Tax Assessment Act 1997 to be a part of the head company, continued to be held by the head company until the entity ceased to be a subsidiary member.

Excepted assets

             (2)  For the purposes of paragraph (1)(d), excepted assets are assets that:

                     (a)  the head company disposed of in the ordinary course of a business that the head company carried on by virtue of the entity being taken by subsection 701-1(1) of the Income Tax Assessment Act 1997 to be a part of the head company; and

                     (b)  were minor assets, having regard to the nature and size of that business.

Immediate availability of capital loss or net capital loss

             (3)  If this section applies, neither subsection 104-500(4) nor subsection 104-500(5) of the Income Tax Assessment Act 1997 applies in relation to the head company for the income year in which the entity ceases to be a subsidiary member of any later income year.

Table of Subdivisions

701C-A Overview

701C-B Membership rules allowing foreign holding

701C-C Modifications of tax cost setting rules

Table of sections

701C-1      Overview



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