Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 705 - Tax cost setting amount for assets where entities become subsidiary members of consolidated groups  

Subdivision 705-D - Where multiple entities are linked by membership interests  

Modified application of Subdivision 705-A

SECTION 705-227   Adjustment in working out step 3A of allocable cost amount to take account of membership interests held by linked entities in other linked entities  


Object

705-227(1)    
The object of this section is to modify the effect that section 705-93 (step 3A of allocable cost amount) has in accordance with this Subdivision so that it takes account of * membership interests that linked entities hold in other linked entities at the time (the linked entity joining time ) when the linked entities become * subsidiary members of the group.

Apportionment of step 3A amount among first level interposed entities

705-227(2)    


If:


(a) under section 705-93 , in its application in accordance with this Subdivision, there is a step 3A amount for the purpose of working out the group's * allocable cost amount for a particular linked entity (the subject entity ); and


(b) at the linked entity joining time, one or more of the linked entities (the first level entities ) in which the * head company holds * membership interests are interposed between the head company and the subject entity;

then the step 3A amount is apportioned among the first level entities and the subject entity on the following basis:


(c) each first level entity has the following proportion of the step 3A amount:


  *Market value of first level entity's
direct and indirect membership
                interests in subject entity                
*Market value of all membership
interests in subject entity
 

where:

market value of all membership interests in subject entity
means the * market value, at the linked entity joining time, of all * membership interests in the subject entity that are held by entities that become * members of the group at that time.

market value of first level entity's direct and indirect membership interests in subject entity
means so much of the *market value of all membership interests in the subject entity (as defined above) as is attributable to * membership interests that the first level entity holds directly, or indirectly through other linked entities; and


(d) the subject entity has the remainder of the step 3A amount.



Membership interests in subsidiary members of group

705-227(3)    


In applying section 705-93 for the purposes of this Subdivision, disregard paragraph 705-93(1)(f) if:


(a) the rollover asset mentioned in that section is a *membership interest in an entity that becomes a *subsidiary member at the linked entity joining time; and


(b) the rollover asset is not held at that time by the entity that becomes the *head company of the group.

Note:

The step 3A amount is worked out under section 705-93 .


705-227(4)    
(Repealed by No 56 of 2010)


705-227(5)    
(Repealed by No 56 of 2010)




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