21Transfers of trading stock

21 Transfers of trading stock

Trading stock on hand at beginning of year of income (1) If: (a) a transfer of trading stock occurred during a year of income of the transferring corporation; and (b) the trading stock was on hand at the beginning of that year of income; then: (c) section 70‑35 of the Income Tax Assessment Act 1997 has effect as if the trading stock were not on hand at the beginning of the year of income; and (d) section 8‑1 of the Income Tax Assessment Act 1997 has effect as if: (i) 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 section 70‑45 of the Income Tax Assessment Act 1997); and (iii) 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 (2) If: (a) a transfer of trading stock occurred during a year of income of the transferring corporation; and (b) 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) section 8‑1 of the Income Tax Assessment Act 1997 has effect as if: (i) the receiving corporation had incurred expenditure in the acquisition of the trading stock; and (ii) the amount of that expenditure were equal to the amount of the expenditure mentioned in paragraph (c); and (iii) 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.