Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p5
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 5/10)
Character Range: 5802573–5805344

all income years.

Adjustment for disproportionate assessability
 (5) If the total of the amounts included in a combining entity's assessable income in respect of amounts *derived under the arrangement for the joining adjustment year and all earlier income years is not equal to the amount worked out under subsection (6):
 (a) if the total is less—the entity's assessable income for the joining adjustment year includes the difference; and
 (b) if it is more—the entity is entitled to deduct the difference for the joining adjustment year.

Pre‑joining time proportion of total arrangement assessable income
 (6) The amount is worked out using the formula:

where:
pre‑joining time services proportion has the same meaning as in subsection (4).
total arrangement assessable income means the total of the amounts that, ignoring this Part (other than subsection (7) of this section), would be included in the combining entity's assessable income for amounts *derived by it under the arrangement for all income years.

Modified application of section if combining entities previously members of same group
 (7) If the combining entities were *members of the same *consolidated group (whether or not the group to which this section applies) on one or more previous occasions, this section applies in relation to the entities as if:
 (a) the only things to be done under the arrangement in return for the incurring of the expenditure were those things to be done after the entities ceased to be members of the same group on the previous occasion or the last of the previous occasions; and
 (b) the only deductions allowable to an entity for expenditure incurred by it under the arrangement, and the only amounts included in an entity's assessable income in respect of amounts *derived under the arrangement, were:
 (i) if the entity was the *head company of the consolidated group of which the combining entities were members on the previous occasion or last of the previous occasions—those for the income year, in which the previous occasion or the last of the previous occasions occurred, that are attributable to the period after that occasion and those for all later income years; and
 (ii) in any other case—those for the income year that started, or, if section 701‑30 applies, the income year that is taken by subsection (3) of that section to have started, when the entity ceased to be a *subsidiary member of the group on the previous occasion or the last of the previous occasions and those for all later income years.

701‑75  Adjustments to taxable income where identities of parties to arrangement re‑emerge on leaving group

Section applies to certain arrangements
 (1) This section applies for the head company core purposes and the entity core purposes if the