Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p23
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 23/45)
Character Range: 5965853–5968668

worked out where linked entities have membership interests in other linked entities
705‑227 Adjustment in working out step 3A of allocable cost amount to take account of membership interests held by linked entities in other linked entities
705‑230 Adjustments to restrict step 4 reduction of allocable cost amount to effective distributions to head company in respect of direct membership interests
705‑235 Adjustment to allocation of allocable cost amount to take account of owned profits or losses of certain linked entities
705‑240 Modified application of section 705‑57

Application and object

705‑215  Application and object of this Subdivision

Application
 (1) This Subdivision has effect for the head company core purposes set out in subsection 701‑1(2) if:
 (a) 2 or more entities (each of which is a linked entity) become members of a *consolidated group at the same time as a result of an event that happens in relation to one of them; and
 (b) the case is not covered by Subdivision 705‑C.
Note: This is the third exception to Subdivision 705‑A: see paragraph 705‑15(c). In order for this Subdivision to have effect, one of the entities would need to hold directly or indirectly, just before the joining time, membership interests in all of the other entities.
Example: Entities A and B are not members of a consolidated group, but members of such a group, together with entity A, jointly hold all the membership interests in entity B. Members of the group then acquire all the membership interests in entity A and as a result of this event both entities, which are linked by the membership interests that one holds in the other, become members of the group.

Object
 (2) The object of this Subdivision is to modify the rules in Subdivision 705‑A (which basically determine the tax cost setting amount for assets of an entity joining an existing consolidated group) so that they take account of the different circumstances that apply where linked entities join.

Modified application of Subdivision 705‑A

705‑220  Subdivision 705‑A has effect with modifications
 (1) Subdivision 705‑A has effect in relation to each linked entity becoming a *subsidiary member of the *consolidated group in the same way as that Subdivision operates in relation to an entity becoming a subsidiary member of a consolidated group in circumstances covered by that Subdivision.
 (2) However, that effect of Subdivision 705‑A is subject to modifications set out in this Subdivision.

705‑225  Order in which tax cost setting amounts are to be worked out where linked entities have membership interests in other linked entities

Object
 (1) The object of this section is to ensure that where, on becoming *subsidiary members, linked entities hold assets consisting of *membership interests in other linked entities, the *head