Income Tax (Transitional Provisions) Act 1997

If:

section 40‑35, 40‑37, 40‑40 or 40‑43 of this Act treats the head company of the consolidated group as holding a notional asset at the joining time because expenditure is taken under section 701‑5 (Entry history rule) of the Income Tax Assessment Act 1997 to be expenditure of the head company; and

section 40‑35, 40‑37, 40‑40 or 40‑43 of this Act treated the joining entity as holding a notional asset just before the joining time because of the expenditure;

The object of this section is to ensure, by reducing the adjustable value of a notional asset of the head company, that the head company cannot get both:

a deduction for the notional asset reflecting the amount of the expenditure relating to depreciating assets; and

a deduction for that amount because of the decline in value of those depreciating assets.

The opening adjustable value of the head company’s notional asset for the income year that includes the joining time is so much of the adjustable value of the joining entity’s notional asset just before the joining time as does not reasonably relate to any depreciating asset.

This offsets the increases in adjustable value of the head company’s depreciating assets under subsection 705‑305(3).