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INCOME TAX ASSESSMENT ACT 1997 - SECT 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

             (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

             (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:

                            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

             (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.



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