Document ID: chunk:federal_register_of_legislation:C2010C00605:clause:5_6:p1
Version: federal_register_of_legislation:C2010C00605
Segment Type: clause
Provision Reference: sch 5 cl 6 (pt 1/3)
Character Range: 86801–89493

6  After Division 711
Insert:

Division 713—Rules for particular kinds of entities

Table of Subdivisions

713‑A Trusts

Subdivision 713‑A—Trusts

Table of sections

Working out a joined group's allocable cost amount for a joining trust

713‑20 Increasing the step 1 amount for settled capital that could be distributed tax free in respect of discretionary interests
713‑25 Undistributed, realised profits that accrue to joined group before joining time and could be distributed tax free in respect of discretionary interests—step 3 in working out allocable cost amount

Determining destination of distribution by non‑fixed trust

713‑50 Factors to consider

Working out a joined group's allocable cost amount for a joining trust

713‑20  Increasing the step 1 amount for settled capital that could be distributed tax free in respect of discretionary interests

 (1) The object of this section is to increase the step 1 amount worked out under section 705‑65 (for the purpose of working out the joined group's allocable cost amount) if:
 (a) the joining entity is a trust; and
 (b) some or all of the *membership interests in the trust are neither units nor interests in the trust; and
 (c) some or all of the trust capital is settled capital that could be distributed tax free at the joining time.
The increase in the step 1 amount takes account of the settled capital that could be distributed tax free.

Note 1: As a result, the settled capital that could be distributed tax free is treated in a way that is analogous to the group's cost of acquiring the trust: see subsection 705‑10(2).

Note 2: Paragraph (1)(b) reflects the position that a distribution in respect of a unit or interest in the trust is generally covered by CGT event E4 and so is not tax‑free: see section 104‑70.

 (2) The step 1 amount worked out under section 705‑65 is increased by the amount worked out under the following method statement if, at the joining time, there are *membership interests (the discretionary interests) in the trust each of which satisfies these conditions:
 (a) it is neither a unit nor an interest in the trust;
 (b) the entity that owned it at the joining time began to own it only because money or property was settled on the trust;
 (c) it either has no *cost base or it has a cost base of nil.

Note: If a membership interest has a cost base greater than nil, the cost base is already taken into account in working out the step 1 amount under section 705‑65.

      Method statement
           Step 1. Add up:

                (a) each amount settled on the trust before or at the joining time; and
                (b) the *market value of each item of property settled on the