Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 705.227

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 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

  (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:

    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

  (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.