INCOME TAX ASSESSMENT ACT 1997
This Division has effect:
(a) for the head company core purposes set out in subsection 701-1(2) ; and
(b) for the entity core purposes set out in subsection 701-1(3) ;
if an entity (the leaving entity ) ceases to be a * subsidiary member of a * consolidated group (the old group ) at a particular time (the leaving time ).
The object of this Division is, when entities cease to be * subsidiary members, to preserve the alignment of the * head company's costs for * membership interests in entities and their assets that is established when entities become subsidiary members.
The reasons for preserving this alignment are set out in subsection 705-10(3) .711-5(3)
This is achieved by recognising the * head company's cost for those interests, just before the leaving time, as an amount equal to the cost of the leaving entity's assets at the leaving time reduced by the amount of its liabilities. 711-5(4)
If multiple entities cease to be * subsidiary members at the same time, the cost of any * membership interests that one holds in another is treated in a similar way.