relevant provisions affect the income tax position of the head company of the group in relation to the transfer; and

(b) the effect of the relevant provisions on the income tax position of the receiving corporation is worked out by reference to income tax attributes of the head company, including ones it has because of the following provisions of the Income Tax Assessment Act 1997:

(i) single entity rule);section 701-1 (the

(ii) entry history rule);section 701-5 (the

(iii) head company tax cost setting rule).section 701-10 (the

Circumstances in which this section has effect

the head company tax cost setting rule affects subsection 15(3) and section 18 by setting the head company’s cost base for assets an entity brought into the group when the entity became a subsidiary member of the group;

the entry history rule affects paragraph 16(3)(d) by treating the head company as having been paid, for assuming a liability that was brought into the group by an entity becoming a subsidiary member, the amount paid to the entity for assuming the liability;

the entry history rule affects subsections 17(1) and 22(4) and table item 1 in subsection 22(1) by treating the head company as having included in its assessable income amounts included in the assessable income of an entity that later became a subsidiary member of the group;

the entry history rule affects subsections 17(1) and (2) and 22(4) by treating deductions allowable to an entity before becoming a subsidiary member of the group as having been allowable to the head company.

Provisions whose operation is not modified

section 23;

Division 8.

(a) whether an amount is included in the assessable income of the transferring corporation under Income Tax Assessment Act 1936 or section 6-5, 15-15 or 775-15 of the Income Tax Assessment Act 1997; orsection 25A, 26BB or 159GS of the

(b) whether an amount is allowable as a deduction to the transferring corporation under Income Tax Assessment Act 1936 or section 8-1 or 775-30 of the Income Tax Assessment Act 1997;section 52, 70B or 159GS of the

in respect of a transfer of an asset, the transferring corporation is to be treated as if the transfer had not occurred.

Receiving corporation not entitled to a deduction for expenditure incurred in acquiring asset

(a) whether an amount is included in the assessable income of the receiving corporation under Income Tax Assessment Act 1936 or section 6-5, 15-15 or 775-15 of the Income Tax Assessment Act 1997; orsection 25A or 26BB or Division 16E of Part III of the

(b) whether an amount is allowable as a deduction to the receiving corporation under Income Tax Assessment Act 1936 or section 8-1 or 775-30 of the Income Tax Assessment Act 1997;section 52, 70B or Division 16E of Part III of the

in respect of the holding, or any subsequent disposal, of the asset, the receiving corporation is to be treated as if it had acquired the asset for an amount equal to what would have been the asset’s cost base to the transferring corporation for the purposes of working out under the Income Tax Assessment Act 1997 whether the transferring corporation made a capital gain from the transfer.

(a) whether an amount is included in the assessable income of the transferring corporation under Income Tax Assessment Act 1997; orsection 6-5 or 775-15 of the

(b) whether an amount is allowable as a deduction to the transferring corporation under Income Tax Assessment Act 1997;section 8-1 or 775-30 of the

in respect of a transfer of a liability, the transferring corporation is to be treated as if the transfer had not occurred.

Receiving corporation not assessable in respect of assumption of liability

(a) whether an amount is included in the assessable income of the receiving corporation under Income Tax Assessment Act 1936 or section 6-5 or 775-15 of the Income Tax Assessment Act 1997; orDivision 16E of Part III of the

(b) whether an amount is allowable as a deduction to the receiving corporation under Income Tax Assessment Act 1936 or section 8-1 or 775-30 of the Income Tax Assessment Act 1997;Division 16E of Part III of the

in respect of the subsistence, or any subsequent transfer, of the liability, the receiving corporation is to be treated as if:

it had been paid or given consideration for the original transfer; and

the amount of the consideration were equal to the amount (if any) of the consideration paid or given to the transferring corporation in respect of the assumption by the transferring corporation of the liability.

a security is transferred; and

either:

(i) one or more amounts (other than periodic interest) are or were included in the transferring corporation’s assessable income under former Income Tax Assessment Act 1936 or under section 6-5 of the Income Tax Assessment Act 1997 in respect of the security; orsection 25, or under Division 16E of Part III, of the

(ii) one or more amounts (other than periodic interest) are or were allowable as deductions to the transferring corporation under former Income Tax Assessment Act 1936 or under section 8-1 of the Income Tax Assessment Act 1997 in respect of the security;section 51, or under Division 16E of Part III, of the

those Acts have effect as if the amount that, apart from this subsection, would have been the consideration paid or given by the receiving corporation in respect of the acquisition of the security as the result of the transfer were:

increased by the amount, or the sum of the amounts, covered by subparagraph (b)(i); and

reduced by the amount, or the sum of the amounts, covered by subparagraph (b)(ii).

Adjustment where liability under security is transferred

a liability under a security is transferred; and

(b) one or more amounts (other than periodic interest) are or were allowable as deductions to the transferring corporation under former Income Tax Assessment Act 1936 or under section 8-1 of the Income Tax Assessment Act 1997 in respect of the security;section 51, or under Division 16E of Part III, of the

those Acts have effect as if the amount that, apart from this subsection, would have been the consideration paid or given to the receiving corporation in respect of the assumption of the liability as the result of the transfer were increased by the amount, or the sum of the amounts, covered by paragraph (b).

Definitions

a transfer of trading stock occurred during a year of income of the transferring corporation; and

the trading stock was on hand at the beginning of that year of income;

then:

(c) Income Tax Assessment Act 1997 has effect as if the trading stock were not on hand at the beginning of the year of income; andsection 70-35 of the

(d) Income Tax Assessment Act 1997 has effect as if:section 8-1 of the

the receiving corporation had incurred expenditure in the acquisition of the trading stock; and

(ii) the amount of that expenditure were equal to the value of the trading stock as at the end of the immediately preceding year of income of the transferring corporation (being the value that applies for the purposes of Income Tax Assessment Act 1997); andsection 70-45 of the

that expenditure had been so incurred immediately after the transfer; and

(e) sections 70-90 and 70-95 of the Income Tax Assessment Act 1997 do not apply in relation to the transfer of the trading stock.

Trading stock not on hand at beginning of year of income

a transfer of trading stock occurred during a year of income of the transferring corporation; and

the trading stock was not on hand at the beginning of that year of income;

then:

(c) a deduction is not allowable under the Income Tax Assessment Act 1997 to the transferring corporation in respect of expenditure incurred in the acquisition of the trading stock; and

(d) Income Tax Assessment Act 1997 has effect as if:section 8-1 of the

the receiving corporation had incurred expenditure in the acquisition of the trading stock; and

the amount of that expenditure were equal to the amount of the expenditure mentioned in paragraph (c); and

that expenditure had been so incurred immediately after the transfer; and

(e) sections 70-90 and 70-95 of the Income Tax Assessment Act 1997 do not apply in relation to the transfer of the trading stock.

(a) Income Tax Assessment Act 1997;section 25-35 of the

(b) subsection 63(1A) of the Income Tax Assessment Act 1936.

Modification of tests for receiving corporation to deduct bad debt

this Act applies to one or more transfers of assets by the transferring corporation to the receiving corporation; and

(b) an entity incurs a debt to the transferring corporation in a year of income (the debt year); and

the debt year is the income year in which this section (as originally enacted) commenced or an earlier income year; and

(d) any one or more of Subdivisions 165-C, 175-C, 709-D and 719-I of the Income Tax Assessment Act 1997 prevent the transferring corporation from deducting an amount for the debt for an income year (the deduction year); and

the transferring corporation did not, at any time in the deduction year, derive income from:

a business of a kind that it did not carry on; or

a transaction of a kind that it had not entered into in the course of its business operations;

before the transfer, or the earliest of the transfers, occurred;

none of those Subdivisions prevents the transferring corporation from deducting that amount.

Subdivision 175-C of that Act is about the Commissioner preventing a company from getting certain tax benefits through its unused bad debts.

Subdivision 709-D of that Act is about the conditions that must be met for an entity to deduct a bad debt that has for a period been owed to a member of a consolidated group and has for another period been owed to an entity that was not a member of that group for the period.

Subdivision 719-I of that Act is about the conditions that must be met for an entity to deduct a bad debt that has for a period been owed to a member of a MEC group.

Limit on deductions for partly written-off debt

(a) Income Tax Assessment Act 1997; orsection 8-1 or 25-35 of the

(b) Income Tax Assessment Act 1936;section 63 or former section 51 of the

reduced by the total of any amounts included in its assessable income in respect of the debt under:

(c) Subdivision 20-A of the Income Tax Assessment Act 1997; or

(d) former subsection 63(3) of the Income Tax Assessment Act 1936.

(b) the Financial Corporations (Transfer of Assets and Liabilities) Act 1993 applies to the transfer;

before the transfer, this section applied to interest paid by the transferor in discharge of the liability;

the transferor issued the debentures or debt interests;”.

this Act applies to one or more transfers by the transferring corporation to the receiving corporation; and

(b) the transferring corporation is taken (otherwise than because of a transfer of a tax loss under former Income Tax Assessment Act 1936 or under Subdivision 170-A of the Income Tax Assessment Act 1997) to have incurred a tax loss for a year of income (the loss year); andsection 80G of the

the loss year is the income year in which former section 26 of this Act commenced or an earlier income year; and

(d) Subdivision 165-A or 175-A, or both, of the Income Tax Assessment Act 1997 prevent the transferring corporation from deducting an amount of that tax loss for an income year (the deduction year); and

the transferring corporation did not, at any time in the deduction year, derive income from:

a business of a kind that it did not carry on; or

a transaction of a kind that it had not entered into in the course of its business operations;

before the transfer, or the earliest of the transfers, occurred;

neither Subdivision 165-A nor 175-A of that Act prevents the transferring corporation from deducting that amount.

Subdivision 175-A of the Income Tax Assessment Act 1997 is about the Commissioner preventing a company from getting certain tax benefits through its unused tax losses.

(a) the head company of a consolidated group or MEC group incurred a tax loss because of Subdivision 707-A of the Income Tax Assessment Act 1997; and

(b) the company (the real loss-maker) that incurred the tax loss apart from that Subdivision is a member of the group in the deduction year; and

disregarding section 701-1 (the single entity rule) of that Act, this Act applies to one or more transfers by the real loss-maker to the receiving corporation.

the head company were the transferring corporation in relation to each transfer described in paragraph (1)(a) and this Act applied to each of those transfers; and

(b) the head company incurred the tax loss for the income year for which the real loss-maker incurred it (apart from Subdivision 707-A of the Income Tax Assessment Act 1997); and

each reference in that subsection to Subdivision 165-A of that Act were a reference to that Subdivision as its operation is affected by Subdivision 707-B of that Act, and by Subdivision 719-F of that Act (if relevant).

(a) The Financial Corporations (Transfer of Assets and Liabilities) Act 1993 was amended by Schedule 5 (item 14) only of the Taxation Laws Amendment Act (No. 2) 1997, subsection 2(1) of which provides as follows:

(b) The Financial Corporations (Transfer of Assets and Liabilities) Act 1993 was amended by Schedule 4 only of the Financial Laws Amendment Act 1997, subsections 2(1) and (2A) of which provide follows:

(c) The Financial Laws Amendment Act 1997 was amended by Schedule 5 (items 2 and 4) only of the Financial Sector Reform (Amendments and Transitional Provisions) Act (No. 1) 2000, subsection 2(5) of which provides as follows:

(d) The Financial Corporations (Transfer of Assets and Liabilities) Act 1993 was amended by Schedule 2 (items 38 and 39), Schedule 5 (items 95–98) and Schedule 8 (item 52) only of the Tax Law Improvement Act 1997, subsections 2(1)–(3) of which provide as follows:

(e) The Financial Corporations (Transfer of Assets and Liabilities) Act 1993 was amended by Schedule 9 only of the Taxation Laws Amendment Act (No. 1) 1998, subsection 2(1) of which provides as follows:

(f) The Financial Corporations (Transfer of Assets and Liabilities) Act 1993 was amended by Schedule 2 (items 540–544) and Schedule 3 (items 22 and 23) only of the Tax Law Improvement Act (No. 1) 1998, subsections 2(1)–(3) of which provide as follows:

(g) The Financial Corporations (Transfer of Assets and Liabilities) Act 1993 was amended by Schedule 1 (items 48–63) only of the Financial Sector Reform (Consequential Amendments) Act 1998, subsection 2(2) of which provides as follows:

(h) The Financial Corporations (Transfer of Assets and Liabilities) Act 1993 was amended by Schedule 18 (item 46) only of the Financial Sector Reform (Amendments and Transitional Provisions) Act 1998, subsection 2(2)(p) of which provides as follows:

(p) Schedule 18, other than the items amending the Australian Prudential Regulation Authority Act 1998.

(i) The Financial Corporations (Transfer of Assets and Liabilities) Act 1993 was amended by Schedule 5 (items 16–19) only of the New Business Tax System (Integrity and Other Measures) Act 1999, subsection 2(2) of which provides as follows:

(j) The Financial Corporations (Transfer of Assets and Liabilities) Act 1993 was amended by Schedule 4 only of the Financial Sector Reform (Amendments and Transitional Provisions) Act (No. 1) 2000, subsections 2(1), (3), (4), (5) (12) and (13) of which provide as follows:

after all of the Acts listed in subsection (13) have received the Royal Assent; and

on the day that is the last day on which any of those Acts received the Royal Assent.

this Act;

(b) each of the Acts referred to in the definition of Validation Act in item 1 of Schedule 12 to this Act.

Endnote 4—Amendment history