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-B - Case of group formation  

Modified application of Subdivision 705-A

SECTION 705-147   Adjustment in working out step 3A of allocable cost amount to take account of membership interests held by subsidiary members in other such members  

Object

705-147(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 entities that become * subsidiary members hold in other such entities. Apportionment of step 3A amount among first level interposed entities

705-147(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 an entity (the subject entity ) that becomes a * subsidiary member of the group at the formation time; and


(b) at that time one or more entities (the first level entities ), that become subsidiary members of the group and 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 formation 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 interposed entities that become * subsidiary members of the group at the formation time; and


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

Membership interests in subsidiary members of group

705-147(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 formation 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 .

705-147(4)  
(Repealed by No 56 of 2010)

705-147(5)  
(Repealed by No 56 of 2010)



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