Document ID: chunk:federal_register_of_legislation:C2010C00690:clause:1_6:p2
Version: federal_register_of_legislation:C2010C00690
Segment Type: clause
Provision Reference: sch 1 cl 6 (pt 2/26)
Character Range: 179048–181677

is worked out by applying section 705‑30 in a corresponding way to the way that section applies to work out the *terminating value for an asset that a joining entity holds at the joining time.

711‑35  If head company becomes entitled to certain deductions—step 2 in working out allocable cost amount

 (1) For the purposes of step 2 in the table in subsection 711‑20(1), the step 2 amount is worked out using the following formula:
where:

acquired deductions means all deductions covered by subsection (2) for expenditure that constituted an acquired deduction of the *head company under subsection 705‑115(1) when an entity (whether or not the leaving entity) became a *subsidiary member of the old group.

owned deductions means the sum of all deductions covered by subsection (2) that are not acquired deductions.

 (2) This subsection covers any deduction to which the leaving entity becomes entitled under section 701‑40 as a result of the leaving entity ceasing to be a *subsidiary member of the old group, other than a deduction for expenditure:
 (a) that is, forms part of or reduces, the cost of an asset that becomes an asset of the leaving entity because subsection 701‑1(1) (the single entity rule) ceases to apply; or
 (b) to which section 110‑40 (about expenditure on assets acquired before 7.30 pm on 13 May 1997) applies.

711‑40  Liabilities owed to the leaving entity by members of the old group—step 3 in working out allocable cost amount

 (1) For the purposes of step 3 in the table in subsection 711‑20(1), the step 3 amount is the total, for all liabilities owed by *members of the old group to the leaving entity at the leaving time, of the *market values of the corresponding assets of the leaving entity.

Where cost of liability is less than its market value

 (2) However, if subsection (3) applies to any of the liabilities, the cost amount mentioned in that subsection, instead of the *market value, is to be used under subsection (1) for the liability in working out the step 3 amount.

 (3) This subsection applies to a liability if:
 (a) the *member of the old group would have made a *capital gain or a *capital loss for the *CGT event that, disregarding subsection 701‑1(1) (the single entity principle), would have happened when the liability arose; and
 (b) the amount (the cost amount) of:
 (i) if the CGT event is or would have been CGT event D1—the *incidental costs; or
 (ii) if the CGT event is CGT event D2, D3 or F1—the expenditure incurred; or
 (iii) in any other case—the *cost base or *reduced cost base;
  that would be taken into account is less than the *market value of the