16Liability transfers—general

16 Liability 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 6‑5 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 8‑1 or 775‑30 of the Income Tax Assessment Act 1997; 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 (2) An amount is not to be included in the assessable income of the receiving corporation under section 6‑5 or 775‑15 of the Income Tax Assessment Act 1997 in respect of the assumption of the liability as a result of the transfer. Assumption of liability by receiving corporation (3) If a liability is transferred, then, in determining: (a) whether an amount is included in the assessable income of the receiving corporation under Division 16E of Part III of the Income Tax Assessment Act 1936 or section 6‑5 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 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 subsistence, or any subsequent transfer, of the liability, the receiving corporation is to be treated as if: (c) it had been paid or given consideration for the original transfer; and (d) 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.

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.