Document ID: chunk:federal_register_of_legislation:C2014C00749:clause:3_2:p5
Version: federal_register_of_legislation:C2014C00749
Segment Type: clause
Provision Reference: sch 3 cl 2 (pt 5/6)
Character Range: 31010–33738

in working out step 4 of allocable cost amount for successive distributions through interposed entities

Object
 (1) The object of this section is to ensure that, in working out the group's *allocable cost amount for entities that become *subsidiary members of the group at the formation time, there is only one reduction under step 4 in the table in section 705‑60 (about pre‑formation time distributions out of certain profits) for distributions of the same profits.

When section applies
 (2) This section applies if, apart from this section:
 (a) in working out the group's *allocable cost amount for an entity that becomes a *subsidiary member of the group at the formation time, there would be a reduction under step 4 in the table in section 705‑60 for a distribution (the first distribution) made by the entity; and
 (b) in working out the group's *allocable cost amount for a second entity that becomes a *subsidiary member of the group at that time, there would also be a reduction under that step for any of the first distribution that the second entity successively distributed as mentioned in paragraph 705‑95(a).

No step 4 reduction in respect of successive distribution of amount for which there has already been a step 4 reduction
 (3) If this section applies, there is no reduction as mentioned in paragraph (2)(b).

705‑160  Adjustment to allocation of allocable cost amount to take account of owned losses of certain entities that become subsidiary members

Object
 (1) The object of this section is to prevent a distortion under section 705‑35 in the allocation of *allocable cost amount to an entity that becomes a *subsidiary member of the group where that entity has *membership interests in another entity that has certain tax losses when it becomes a subsidiary member.

Adjustment to allocation of allocable cost amount
 (2) If:
 (a) an entity becomes a *subsidiary member of the group at the formation time; and
 (b) the entity has *membership interests in a second entity that becomes a subsidiary member of the group at that time; and
 (c) in working out the group's *allocable cost amount for the second entity an amount is required to be subtracted (the loss subtraction amount) under step 5 in the table in section 705‑60 (about losses accruing before becoming a subsidiary member of the group);
then, for the purposes of working out under section 705‑35 the *tax cost setting amount for the assets of the first entity, the *market value of the first entity's membership interests in the second entity is increased by the first entity's interest in the loss subtraction amount (see subsection (3)).

First entity's interest in loss subtraction amount
 (3) The first entity's interest in the loss