Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) For the purposes of step 7 in the table in section 705 - 60, the step 7 amount is worked out using the following formula:
where:
"acquired deductions" means all deductions covered by subsection (2) that are not owned deductions.
"owned deductions" means the sum of all deductions for which the following requirements are satisfied:
(a) the deduction is covered by subsection (2);
(b) assuming the expenditure that gave rise to the deduction were instead a profit that accrued at the time the expenditure was incurred, a distribution of that profit would have been a distribution made to the joined group out of profits that accrued to the joined group before the joining time (see subsection 705 - 90(7)).
(2) This subsection covers any deduction to which the * head company becomes entitled under section 701 - 5 as a result of the joining entity becoming a * subsidiary member of the joined group, other than a deduction for expenditure:
(a) that is, forms part of or reduces, the cost of an asset of the joining entity that becomes an asset of the head company because subsection 701 - 1(1) (the single entity rule) applies; or
(b) to which section 110 - 40 (about expenditure on assets acquired before 7.30 pm on 13 May 1997) applies; or
(c) to the extent that the expenditure reduced the undistributed profits comprising the step 3 amount in the table in section 705 - 60.
(3) Subsection (2) does not cover a deduction under
section 43 - 15 (which relates to *
undeducted construction expenditure) if the joining entity * acquired the
asset to which the deduction relates at or before 7.30 pm, by legal time in
the Australian Capital Territory, on 13 May 1997.