Inserts for
Tax Laws Amendment (2012 Measures No. 2) Bill 2012: Consolidation

EXPOSURE DRAFT

Commencement information	
Column 1	Column 2	Column 3	
Provision(s)	Commencement	Date/Details	
1.  Schedule 1, Part 1	The day this Act receives the Royal Assent.		
2.  Schedule 1, Part 2	Immediately after the commencement of the provision(s) covered by table item 1.		
3.  Schedule 1, Part 3	Immediately after the commencement of the provision(s) covered by table item 2.		
4.  Schedule 1, Part 4	The day this Act receives the Royal Assent.		
5.  Schedule 2	Immediately after the commencement of Parts 1, 2 and 3 of Schedule 1 to the Tax Laws Amendment (Taxation of Financial Arrangements) Act 2009	26 March 2009	
Contents
4	Amendment of assessments	3
Schedule 1—Consolidation	3
Part 1—Pre rules	3
Income Tax Assessment Act 1997	3
Part 2—Interim rules	3
Income Tax Assessment Act 1997	3
Part 3—Prospective rules	3
Income Tax Assessment Act 1997	3
Part 4—Application	3
Schedule 2—Consolidation and TOFA	3
Income Tax Assessment Act 1997	3
Tax Laws Amendment (Taxation of Financial Arrangements) Act 2009	3

4  Amendment of assessments
		Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment if:
	(a)	the assessment was made before the commencement of this section; and
	(b)	the amendment is made within 2 years after that commencement; and
	(c)	the amendment is made for the purpose of giving effect to Schedule 1 to this Act.

Schedule 1—Consolidation
Part 1—Pre rules
Income Tax Assessment Act 1997
1  Section 12‑5 (table item headed “consolidated groups and MEC groups”)
Omit:
rights to future income 		716‑405	
2  Subsection 701‑55(5C)
Repeal the subsection, substitute:
WIP amount assets
	(5C)	If:
	(a)	the asset’s tax cost is set because an entity becomes a *subsidiary member of a *consolidated group at a time (the joining time); and
	(b)	the asset is a *WIP amount asset;
the expression means that section 25‑95 applies as if the *head company had paid a *work in progress amount for the income year in which the joining time occurs equal to the *tax cost setting amount of the asset.
Consumable stores
	(5D)	If:
	(a)	the asset’s tax cost is set because an entity becomes a *subsidiary member of a *consolidated group at a time (the joining time); and
	(b)	the asset is consumable stores;
the expression means that, for the purposes of section 8‑1, the *head company of the group is taken to have incurred an outgoing at the joining time in acquiring the asset equal to the asset’s *tax cost setting amount.
3  Subsection 701‑55(6)
Repeal the subsection, substitute:
Other provisions
	(6)	If any provision of this Act that is not mentioned above is to apply in relation to the asset, the expression means that the provision applies as if the asset’s cost at that time were equal to its *tax cost setting amount.
Note:	For specific clarifications of the operation of this subsection in relation to bad debts, see Subdivision 716‑S.
4  Section 701‑56 (heading)
Repeal the heading, substitute:
701‑56  Non‑application of subsection 701‑55(6) to certain assets
5  Subsections 701‑56(1) and (2)
Repeal the subsections.
6  Subsection 701‑58(2)
Omit “, (5C)”, substitute “, (5C), (5D)”.
7  After section 701‑61
Insert:
701‑63  Asset forming part of goodwill, right to future income, etc.
	(1)	To avoid doubt, for the purposes of this Part:
	(a)	treat goodwill of an entity as a single asset; and
	(b)	treat an asset of the entity that is an *asset forming part of goodwill as being part of that single asset; and
	(c)	do not treat an asset of the entity that is an asset forming part of goodwill as a separate asset.
	(2)	An asset forming part of goodwill means any of the following:
	(a)	an intangible asset, the value of which is attributable to expected future profits from *life insurance policies or *general insurance policies;
	(b)	a customer relationship asset, know‑how asset or another accounting intangible asset, that:
	(i)	is not a *CGT asset; and
	(ii)	is not goodwill;
	(c)	a *non‑deductible right to future income.
	(3)	A non‑deductible right to future income is a *right to future income that is not a *WIP amount asset.
	(4)	A right to future income is a valuable right (including a contingent right) to receive an amount for the performance of work or services or the provision of goods if:
	(a)	the valuable right forms part of a contract or agreement; and
	(b)	the *market value of the valuable right (taking into account all the obligations and conditions relating to the right) is greater than nil; and
	(c)	the valuable right is not a *Division 230 financial arrangement.
	(5)	WIP amount asset means an asset that is in respect of work (but not goods) that has been partially performed by a recipient mentioned in paragraph 25‑95(3)(b) for a third entity but not yet completed to the stage where a recoverable debt has arisen in respect of the completion or partial completion of the work.
8  Section 701‑90
Repeal the section.
9  Paragraph 705‑25(5)(d)
Omit “a right that is an asset covered by section 716‑410 (rights to future amounts that are expected to be included in assessable income)”, substitute “a right that is a *WIP amount asset”.
10  Section 716‑405
Repeal the section.
11  Section 716‑410
Repeal the section.
12  Subsection 995‑1(1)
Insert:
asset forming part of goodwill has the meaning given by subsection 701‑63(2).
13  Subsection 995‑1(1)
Insert:
non‑deductible right to future income has the meaning given by subsection 701‑63(3).
14  Subsection 995‑1(1)
Insert:
right to future income has the meaning given by subsection 701‑63(4).
15  Subsection 995‑1(1) (definition of unexpended tax cost setting amount)
Repeal the definition.
16  Subsection 995‑1(1)
Insert:
WIP amount asset has the meaning given by subsection 701‑63(5).

Part 2—Interim rules
Income Tax Assessment Act 1997
17  Section 12‑5 (table item headed “consolidated groups and MEC groups”)
Repeal the item, substitute:
consolidated groups and MEC groups		
assets in relation to Division 230 financial arrangement 		701‑61(4)	
rights to future income 		716‑405	
18  Subsection 701‑55(5C)
Repeal the subsection, substitute:
Rights to future amounts to be included in assessable income of head company
	(5C)	If:
	(a)	the asset’s tax cost is set because an entity becomes a *subsidiary member of a *consolidated group; and
	(b)	the asset is a *right to future income (other than a *non‑deductible right to future income in relation to the entity);
the expression means that section 716‑405 may apply in relation to the asset after the particular time.
19  Subsection 701‑55(6)
Repeal the subsection, substitute:
Other provisions
	(6)	If any provision of this Act that is not mentioned above is to apply in relation to the asset by including an amount in assessable income, or by allowing an amount as a deduction, in a way that brings into account (directly or indirectly) any of the following amounts:
	(a)	the cost of the asset;
	(b)	outgoings incurred, or amounts paid, in respect of the asset;
	(c)	expenditure in respect of the asset;
	(d)	an amount of a similar kind in respect of the asset;
the expression means that the provision applies, for the purpose of determining the amount included in assessable income or the amount of the deduction, as if the cost, outgoing, expenditure or other amount had been incurred or paid to acquire the asset at the particular time for an amount equal to its *tax cost setting amount.
Note 1:	This subsection modifies the application of the provision only for the purpose of determining the amount included in assessable income or the amount of the deduction. Therefore:
(a)	the acquisition mentioned in this subsection is recognised only for that purpose; and
(b)	apart from the things mentioned in subsection 701‑56(1), that acquisition does not affect the operation of section 701‑5 (the entry history rule) in relation to the asset for other purposes.
Note 2:	For specific clarifications of the operation of this subsection in relation to bad debts, see Subdivision 716‑S.
20  Section 701‑56 (heading)
Repeal the heading, substitute:
701‑56  Setting the tax cost of an asset—subsection 701‑55(6)
21  Before subsection 701‑56(3)
Insert:
Entry history rule
	(1)	To avoid doubt, if subsection 701‑55(6) applies in relation to an asset at the time (the joining time) an entity (the joining entity) became a *subsidiary member of a *consolidated group, the things that are taken to have happened in relation to the *head company of the group under section 701‑5 (the entry history rule) do not include:
	(a)	the cost, outgoing, expenditure or other amount incurred or paid to acquire the asset by the joining entity; and
	(b)	whether the cost, outgoing, expenditure or other amount incurred or paid by the joining entity to acquire the asset has been deducted by the joining entity before the joining time.
Trading stock
	(2)	Subsection 701‑55(6) does not apply in relation to an asset if it is *trading stock.
22  Paragraph 701‑63(2)(a)
Repeal the paragraph.
23  Subsection 701‑63(3)
Repeal the subsection, substitute:
	(3)	A non‑deductible right to future income, in relation to an entity, is a *right to future income that is:
	(a)	a right of the entity under a contract or *arrangement, to the extent that the value of the right is contingent on the renewal of the contract or arrangement; or
	(b)	a right of the entity under a contract or arrangement entered into by the entity with another entity, to the extent that the other entity can unilaterally cancel the contract or arrangement without paying compensation or a penalty.
24  Subsection 701‑63(4)
After “or the provision of goods”, insert “(other than *trading stock)”.
25  Subsection 701‑63(5)
Repeal the subsection.
26  At the end of Division 701
Add:
701‑90  Right to future income treated as separate asset
	(2)	Subject to subsection 701‑63(1), for the purposes of this Part, treat a *right to future income as a separate asset.
	(3)	For the purposes of this Part, if:
	(a)	a *right to future income is treated as a separate asset under subsection (2); and
	(b)	the contract or agreement mentioned in subsection 701‑63(4) in respect of the right to future income also includes one or more other rights;
for the purposes of this Part, treat the contract or agreement (excluding the right to future income) as a separate asset.
	(4)	For the purposes of this Part:
	(a)	take into account all the obligations and conditions relating to a *right to future income treated as a separate asset under subsection (2) in working out the *market value of that separate asset; and
	(b)	if a contract or agreement (excluding the right to future income) is treated as a separate asset under subsection (3)—take into account all the obligations and conditions relating to each right (other than the right to future income) that forms part of the contract or agreement in working out the market value of that separate asset.
27  Paragraph 705‑25(5)(d)
Omit “a right that is a *WIP amount asset”, substitute “a right that is an asset covered by section 716‑410 (rights to future amounts that are expected to be included in assessable income)”.
28  After section 705‑56
Insert:
705‑56A  Modification for tax cost setting in relation to certain rights to future income
	(1)	This section applies if, just before the joining time:
	(a)	the joining entity *holds an asset; and
	(b)	under the terms of a contract or arrangement, the joining entity holds a *right to future income arising from the asset; and
	(c)	the right to future income is not a *non‑deductible right to future income in relation to the joining entity.
	(2)	Subsection (3) applies if the sum of:
	(a)	the *market value of the asset at the joining time; and
	(b)	the market value of the *right to future income at the joining time;
exceeds the market value of the asset at the joining time (disregarding any encumbrances or claims on the asset at the joining time).
	(3)	For the purposes of paragraph 705‑35(1)(c), treat the *market value of the *right to future income as the excess mentioned in subsection (2).
	(4)	If subsection (3) does not apply:
	(a)	the *right to future income is not taken into account under paragraph 705‑35(1)(b) or (c); and
	(b)	the right to future income’s *tax cost setting amount is taken to be nil.
29  After section 716‑400
Insert:
716‑405  Tax cost setting and rights to future income—deduction
	(1)	This section applies if:
	(a)	an entity (the joining entity) became a subsidiary member of a *consolidated group at a time (the joining time); and
	(b)	subsection 701‑55(5C) applies in relation to the asset at the joining time.
Note:	Subsection 701‑55(5C) deals with assets covered by section 716‑410 (Rights to amounts that are expected to be included in assessable income after joining time).
	(2)	An entity qualified for a deduction under subsection (5) for the asset for an income year ending after the joining time can deduct, for that income year:
	(a)	unless paragraph (b) applies—the amount determined under subsection (3A); or
	(b)	if it is reasonable to expect that no amount will be included in the assessable income of an entity qualified for a deduction under subsection (5) for the asset for any later income year—the *unexpended tax cost setting amount for the asset for that income year.
	(3)	Paragraph (2)(b) does not apply in relation to an entity qualified for a deduction under subsection (5) for the asset for that income year if:
	(a)	the entity is the *head company of the group; and
	(b)	another entity ceased to be a *subsidiary member of the group in that income year; and
	(c)	the other entity can deduct an amount under subsection (2) for that income year because it is also qualified for a deduction under subsection (5) for the asset for that income year.
	(3A)	For the purposes of paragraph (2)(a), the amount is the lesser of the following:
	(a)	the *unexpended tax cost setting amount for the asset for that income year;
	(b)	the unexpended tax cost setting amount for the asset for the first income year ending after the joining time, divided by the lesser of:
	(i)	10; or
	(ii)	if the contract or agreement giving rise to the *right to future income mentioned in paragraph 716‑410(a) is for a specified period—the number of days in that period that end after the joining time, divided by 365 and rounded upwards to the nearest whole number.
	(4)	The unexpended tax cost setting amount for the asset for an income year is the *tax cost setting amount for the asset, reduced by:
	(a)	the amounts (if any) of all deductions under this section in respect of the asset for previous income years ending after the joining time; and
	(b)	in determining the amount of a deduction under this section in respect of the asset for that income year for an entity that ceased to be a *subsidiary member of the group in that income year—the amount (if any) that the *head company of the group can deduct under this section in respect of the asset for that income year.
	(5)	An entity is qualified for a deduction under this subsection for an income year for the asset if:
	(a)	the entity:
	(i)	is the *head company of the group; and
	(ii)	held the asset at a time in that income year (whether or not because of the operation of subsection 701‑1(1) (the single entity rule)); or
	(b)	the entity:
	(i)	held the asset at a time in that income year; and
	(ii)	ceased to be a *subsidiary member of the group in that income year or an earlier income year.
	(6)	An amount deducted under this section:
	(a)	is not to be deducted under any other provision of this Act; and
	(b)	is not to be taken into account in determining an amount that is included in the assessable income of any entity qualified for a deduction under subsection (5) for any income year for the asset; and
	(c)	is not to be taken into account in determining an amount of a deduction of any entity qualified for a deduction under subsection (5) for any income year for the asset; and
	(d)	despite paragraphs (b) and (c), is taken never to have been included in any of the elements of the *cost base of the asset.
716‑410  Rights to amounts that are expected to be included in assessable income after joining time
		This section covers an asset at a time if:
	(a)	the asset is a *right to future income; and
Note:	Such a valuable right is treated as a separate asset for the purposes of this Part (see subsection 701‑90(2)).
	(b)	the asset is held by an entity just before the time (the joining time) it became a *subsidiary member of a *consolidated group; and
	(c)	it is reasonable to expect that an amount attributable to the asset will be included in the assessable income of the entity or any other entity after the joining time; and
	(d)	Division 230 does not apply in relation to the asset (disregarding section 230‑455).
30  Subsection 995‑1(1)
Insert:
unexpended tax cost setting amount has the meaning given by section 716‑405.
31  Subsection 995‑1(1) (definition of WIP amount asset)
Repeal the definition.

Part 3—Prospective rules
Income Tax Assessment Act 1997
32  Section 12‑5 (table item headed “consolidated groups and MEC groups”)
Omit:
rights to future income 		716‑405	
33  Subsection 701‑55(5C)
Repeal the subsection, substitute:
WIP amount assets
	(5C)	If:
	(a)	the asset’s tax cost is set because an entity becomes a *subsidiary member of a *consolidated group at a time (the joining time); and
	(b)	the asset is a *WIP amount asset;
the expression means that section 25‑95 applies as if the *head company had paid a *work in progress amount for the year in which the joining time occurs equal to the *tax cost setting amount of the asset.
34  Subsection 701‑55(6) (note 1)
Repeal the note.
35  Section 701‑56 (heading)
Repeal the heading, substitute:
701‑56  Application of subsection 701‑55(6)
36  Subsections 701‑56(1) and (2)
Repeal the subsections, substitute:
	(1)	Subsection (2) applies in relation to each asset that would be an asset of an entity at the time (the joining time) it becomes a *subsidiary member of a *consolidated group, assuming that subsection 701‑1(1) (the single entity rule) did not apply.
	(1A)	Subsection (2) applies only to the extent necessary for the purposes of subsection 701‑55(6) to determine whether a provision of this Act is to apply in relation to each of those assets on and after the joining time.
	(1B)	Subsection (2) applies despite section 701‑5 (the entry history rule).
	(2)	Treat the *head company as having acquired each of those assets at the joining time as part of acquiring the business of the joining entity as a going concern.
37  Paragraph 701‑56(3)(d)
Omit “, other than section 40‑880 (Business related costs)”.
38  Section 701‑63 (heading)
Repeal the heading, substitute:
701‑63  Right to future income and WIP amount asset
39  Subsections 701‑63(1), (2) and (3)
Repeal the subsections.
40  Subsection 701‑63(4)
Omit “(other than *trading stock)”.
41  At the end of section 701‑63
Add:
	(5)	WIP amount asset means an asset that is in respect of work (but not goods) that has been partially performed by a recipient mentioned in paragraph 25‑95(3)(b) for a third entity but not yet completed to the stage where a recoverable debt has arisen in respect of the completion or partial completion of the work.
42  After section 701‑65
Insert:
701‑67  Assets in this Part are CGT assets
		A reference in this Part to an asset does not include a thing that is not a *CGT asset.
43  Section 701‑90
Repeal the section.
44  Paragraph 705‑25(5)(d)
Repeal the paragraph, substitute:
	(d)	a *right to future income (other than a *WIP amount asset).
45  Section 705‑56A
Repeal the section.
46  Section 716‑405
Repeal the section.
47  Section 716‑410
Repeal the section.
48  Subsection 995‑1(1) (definition of asset forming part of goodwill)
Repeal the definition.
49  Subsection 995‑1(1) (definition of non‑deductible right to future income)
Repeal the definition.
50  Subsection 995‑1(1) (definition of unexpended tax cost setting amount)
Repeal the definition.
51  Subsection 995‑1(1)
Insert:
WIP amount asset has the meaning given by subsection 701‑63(5).

Part 4—Application
52  Interpretation
In this Part:
2010 Act means the Tax Laws Amendment (2010 Measures No. 1) Act 2010.
interim rules means Part 3‑90 of the Income Tax Assessment Act 1997 as amended by Part 2 of this Schedule.
original 2002 rules means Part 3‑90 of the Income Tax Assessment Act 1997 (disregarding amendments to that Part made by the 2010 Act and by this Schedule).
original 2010 rules means Part 3‑90 of the Income Tax Assessment Act 1997 (as amended by the 2010 Act, but disregarding amendments to that Part made by this Schedule).
pre rules means Part 3‑90 of the Income Tax Assessment Act 1997 as amended by Part 1 of this Schedule.
prospective rules means Part 3‑90 of the Income Tax Assessment Act 1997 as amended by Part 3 of this Schedule.
53  Main application rules
(1)	The provisions specified in subitem (2), (3), (4) or (5) apply to an assessment of the head company of a consolidated group or MEC group for an income year in respect of an entity (the joining entity) that becomes a member of the group at a time (the joining time).
(2)	Those provisions are the pre rules if:
	(a)	the joining time is before 12 May 2010; or
	(b)	the arrangement under which the joining entity joined the group commenced (see item 55) before 10 February 2010.
(3)	Despite subitem (2), those provisions are the interim rules if:
	(a)	both of these conditions are satisfied:
	(i)	the joining time is before 12 May 2010;
	(ii)	the head company’s latest notice of assessment, for the income year, that relates to the application of subsection 701‑55(5C) or (6) of the original 2010 rules in respect of the joining entity, was served on the head company by the Commissioner on or after 12 May 2010 and on or before 30 March 2011; or
	(b)	both of these conditions are satisfied:
	(i)	the joining time is on or after 12 May 2010;
	(ii)	the arrangement under which the joining entity joined the group commenced (see item 55) on or after 10 February 2010 and on or before 30 March 2011.
(4)	Those provisions are the prospective rules if:
	(a)	the joining time is on or after 31 March 2011; and
	(b)	neither subitem (2) nor (3) applies.
(5)	Despite subitems (2), (3) and (4), those provisions are the original 2002 rules if the head company’s latest notice of assessment, for the income year, that relates to the application of subsection 701‑55(6) of the original 2002 rules in respect of the joining entity, was served on the head company by the Commissioner before 12 May 2010.
(6)	Subitem (5) does not apply if:
	(a)	the head company of the group requests an amendment of the assessment and the amendment relates to the application of subsection 701‑55(6) of the original 2002 rules in respect of the joining entity; or
	(b)	the amendment of the assessment:
	(i)	would relate to an asset of a kind mentioned in paragraph 701‑63(2)(b) of the pre rules; and
	(ii)	would not be consistent with the outcome that arises under the pre rules for assets of that kind.
54  Special rule for private rulings etc.
(1)	This item applies to:
	(a)	a private ruling issued before 31 March 2011; or
	(b)	a written advice given by the Commissioner before 31 March 2011 under an Annual Compliance Arrangement;
to the extent that the ruling or advice has effect in relation to the application of subsection 701‑55(5C) or (6) of the original 2010 rules in respect of the joining entity mentioned in item 53.
(2)	Item 53 does not affect that effect of the ruling or advice.
(3)	However, this item does not apply if the head company requests an amendment of the assessment after the issue of the ruling or the giving of the advice.
55  Commencement of arrangement
(1)	Subitems (2), (3) and (4) specify, for the purpose of this Part, the time of commencement of the arrangement under which the joining entity mentioned in item 53 joined the group.
(2)	If the arrangement is or relates to a takeover bid (within the meaning of the Corporations Act 2001) the time is when:
	(a)	for an off‑market bid (within the meaning of that Act)—step 4 of the table in subsection 633(1) of that Act is completed; or
	(b)	for a market bid (within the meaning of that Act)—step 2 of the table in subsection 635(1) of that Act is completed.
(3)	If a court orders, under subsection 411(1) of the Corporations Act 2001:
	(a)	a meeting or meetings of a company’s members about the arrangement; or
	(b)	a meeting or meetings of one or more classes of a company’s members about the arrangement;
the time is when the application for the order was made.
(4)	If subitem (2) or (3) does not apply, the time is when the decision to enter into the arrangement was made.

Schedule 2—Consolidation and TOFA
  
Income Tax Assessment Act 1997
1  Paragraph 715‑375(1)(b)
After “of the joining entity at the joining time”, insert “(disregarding subsection 701‑1(1) (the single entity rule))”.
2  Paragraph 715‑375(1)(c)
Repeal the paragraph, substitute:
	(c)	the accounting liability is or is part of a *Division 230 financial arrangement of the head company at the joining time (because of subsection 701‑1(1) (the single entity rule)).
3  Subsections 715‑375(2), (3) and (4)
Repeal the subsections, substitute:
	(2)	For the purposes of Division 230 and Schedule 1 to the Tax Laws Amendment (Taxation of Financial Arrangements) Act 2009, treat the *head company of the group as starting to have the accounting liability at the joining time for receiving a payment equal to:
	(a)	if the liability is or is part of a *Division 230 financial arrangement of the head company at the joining time (because of subsection 701‑1(1) (the single entity rule)):
	(i)	to which Subdivision 230‑B (accruals method or realisation method) applies; or
	(ii)	to which Subdivision 230‑E (hedging financial arrangements method) applies;
		the amount of the liability, as determined in accordance with:
	(iii)	the joining entity’s *accounting principles for tax cost setting; or
	(iv)	if the amount of the liability cannot be determined in accordance with the joining entity’s accounting principles for tax cost setting—comparable standards for accounting made under a *foreign law; and
	(b)	otherwise—the liability’s *Division 230 starting value at the joining time.
Tax Laws Amendment (Taxation of Financial Arrangements) Act 2009
4  After item 104A of Schedule 1
Insert:
104B  Asset or liability of entity joining pre‑TOFA consolidated group etc.
(1)	This item applies in relation to an asset or liability if:
	(a)	an entity (the joining entity) becomes a subsidiary member of a consolidated group or MEC group at a time (the joining time); and
	(b)	the asset or liability becomes that of the head company of the group because subsection 701‑1(1) (the single entity rule) applies when the joining entity becomes a subsidiary member of the group; and
	(c)	the asset or liability is, or is part of, a financial arrangement at the start of the head company’s first applicable income year; and
	(d)	the head company’s first applicable income year starts after the joining time; and
	(e)	the head company has the asset or liability (whether or not because of subsection 701‑1(1) (the single entity rule)) throughout the period:
	(i)	starting at the joining time; and
	(ii)	ending at the start of the head company’s first applicable income year; and
	(f)	the head company elects to have subitem 104(2) apply to itself.
(2)	For the purposes of subitem 104(13) and section 230‑445 of the Income Tax Assessment Act 1997:
	(a)	assume that subsection 701‑55(5A) of that Act applies in relation to the asset at the joining time; and
	(b)	assume that section 715‑375 of that Act applies as if the liability is, or is part of, a Division 230 financial arrangement at the joining time.
(3)	Subitems 104(14) and (15) do not apply in relation to the asset or liability.
(4)	In the case of an asset, subitems (5), (6) and (7) apply if, on the assumption that subsection 701‑55(5A) of the Income Tax Assessment Act 1997 applies in relation to the asset at the joining time, paragraph 701‑55(5A)(b) of that Act would apply in relation to the asset.
(5)	Work out if the Division 230 starting value for the asset at the joining time exceeds or falls short of its tax cost setting amount.
(6)	If there is an excess, an amount equal to 25% of that excess is included in the head company’s assessable income for:
	(a)	the head company’s first applicable income year; and
	(b)	each of the 3 subsequent income years.
(7)	If there is a shortfall, the head company is entitled to a deduction equal to 25% of that shortfall for:
	(a)	the head company’s first applicable income year; and
	(b)	each of the 3 subsequent income years.