Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p29
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 29/45)
Character Range: 5981223–5984040

for any revenue etc. asset of the second linked entity; and
 (b) if the second linked entity holds a *membership interest in another linked entity—apply section 705‑57 in relation to that interest in accordance with subsection (3) of this section;
and for those purposes:
 (c) the subject membership interest is taken to be a membership interest that the *head company of the group holds directly in the second linked entity; and
 (d) the requirements of paragraphs 705‑57(2)(a) and (b) are taken to be satisfied in relation to the subject membership interest; and
 (e) the subject membership interest is taken to have a *cost base and *reduced cost base equal to the subsection 705‑225(3) tax cost setting amount; and
 (f) the subject membership interest is taken to have a loss of pre‑CGT status adjustment amount equal to the notional section 705‑57 reduction amount.
Note: If the head company actually held any membership interests in the second linked entity, or if other linked entities held membership interests in the second linked entity to which this subsection also applied, those membership interests would also be taken into account in working out the reduction under paragraph (a) and in applying paragraph (b).

Subdivision 705‑E—Adjustments for errors etc.

Guide to Subdivision 705‑E

705‑300  What this Subdivision is about
      Errors in making tax cost setting amount calculations are reversed by means of an immediate capital gain or loss if it would be unreasonable to require the calculations to be re‑done.

Table of sections

Operative provisions
705‑305 Object of this Subdivision
705‑310 Operation of Part IVA of the Income Tax Assessment Act 1936
705‑315 Errors that attract special adjustment action
705‑320 Tax cost setting amounts taken to be correct

Operative provisions

705‑305  Object of this Subdivision
  The object of this Subdivision is to avoid the time and expense involved in correcting errors affecting *tax cost setting amount calculations. This is done by providing for *capital gains or *capital losses to reverse the errors.

705‑310  Operation of Part IVA of the Income Tax Assessment Act 1936
  To avoid doubt, this Subdivision does not limit the operation of Part IVA of the Income Tax Assessment Act 1936.

705‑315  Errors that attract special adjustment action
 (1) Section 705‑320 (about later adjustments to correct *tax cost setting amount calculation errors) applies if the conditions in this section are satisfied.

Tax cost setting amount taken into account
 (2) The first condition is that the *head company of a *consolidated group worked out a *tax cost setting amount, in purported compliance with this Division, for an asset of an entity that becomes a *subsidiary member of the group that is an asset of a kind referred to in section 705‑35 as a reset