15Asset transfers—general

15 Asset transfers—general

Tax treatment of transferring corporation (1) In determining: (a) whether an amount is included in the assessable income of the transferring corporation under section 25A, 26BB or 159GS of the Income Tax Assessment Act 1936 or section 6‑5, 15‑15 or 775‑15 of the Income Tax Assessment Act 1997; or (b) whether an amount is allowable as a deduction to the transferring corporation under section 52, 70B or 159GS of the Income Tax Assessment Act 1936 or section 8‑1 or 775‑30 of the Income Tax Assessment Act 1997; 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 (2) A deduction is not allowable to the receiving corporation under section 8‑1 of the Income Tax Assessment Act 1997 in respect of expenditure incurred in the acquisition of an asset as the result of a transfer. However, this subsection does not apply to the acquisition of trading stock. Receiving corporation to inherit transferring corporation’s cost base (3) If an asset is transferred, then, in determining: (a) whether an amount is included in the assessable income of the receiving corporation under section 25A or 26BB or Division 16E of Part III of the Income Tax Assessment Act 1936 or section 6‑5, 15‑15 or 775‑15 of the Income Tax Assessment Act 1997; or (b) whether an amount is allowable as a deduction to the receiving corporation under section 52, 70B or Division 16E of Part III of the Income Tax Assessment Act 1936 or section 8‑1 or 775‑30 of the Income Tax Assessment Act 1997; 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.

Note: For transitional provisions about former sections 82Y and 82Z of the Income Tax Assessment Act 1936, see Part 2 of Schedule 4 to the New Business Tax System (Taxation of Financial Arrangements) Act (No. 1) 2003.