Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 719 - MEC groups  

Subdivision 719-T - Interactions between this Part and other areas of the income tax law: special rules for MEC groups  

Cancelling loss on realisation event for direct or indirect interest in a subsidiary member of a MEC group

SECTION 719-790   Exception for interests in entity leaving MEC group  

Membership interests in leaving entity

719-790(1)    
If:

(a) the realised interest is a ^* membership interest; and

(b) during the ownership period the first entity ceased to be a ^* subsidiary member of a ^* MEC group;

the first condition in section 719-775 cannot be satisfied, because of that MEC group, at a time when the first entity was a member of the group, unless the interest needed to be disregarded under section 719-30 (about employee shares) in order for the first entity to be a member of the group at that time.

Liabilities owed by leaving entity

719-790(2)    
If the realised interest:

(a) consists of a liability owed by the first entity to the owner; and

(b) became an asset of the owner because subsection 701-1(1) (the single entity rule) ceased to apply to the first entity when it ceased to be a ^* subsidiary member of a ^* MEC group;

the first condition in section 719-775 cannot be satisfied, because of that MEC group, at a time when the first entity was a member of the group.