Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p22
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 22/45)
Character Range: 5963251–5966115

as if it also treated as a *membership interest in the *head company of the acquired group a *non‑membership equity interest in a *subsidiary member of the acquired group, where that interest was held at the acquisition time by a *member of the acquiring group.

705‑200  Modified application of section 705‑85

Object
 (1) The object of this section is to ensure that if any of the following are not held by *members of either group:
 (a) certain employee share interests in *subsidiary members of the acquired group;
 (b) certain *non‑membership equity interests in subsidiary members of the acquired group;
 (c) certain preference share interests in subsidiary members of the acquired group;
and are therefore part of the cost of acquiring the acquired group, they increase the acquiring group's *allocable cost amount for the acquired group.

Increase for certain membership interests in subsidiary members of acquired group
 (2) Subsections 705‑85(1), (2) and (4) have effect as if a *membership interest in a *subsidiary member of the acquired group were a membership interest in the *head company of that group.

Non‑membership equity interests
 (3) Paragraph 705‑85(3)(a) has effect as if it also increased the step 2 amount worked out under section 705‑70 by the amount that would be the sum of the balances of the *non‑share capital accounts of the *subsidiary members of the acquired group, assuming that:
 (a) for a subsidiary member that is not a company—the subsidiary member were a company; and
 (b) each *non‑membership equity interest (if any) in a subsidiary member held at the acquisition time by a person other than a *member of the acquiring group or acquired group were a *non‑share equity interest in the subsidiary member; and
 (c) the non‑share equity interests (if any) mentioned in paragraph (b) were the only non‑share equity interests in the subsidiary member.

Subdivision 705‑D—Where multiple entities are linked by membership interests

Guide to Subdivision 705‑D

705‑210  What this Subdivision is about
      When entities that are linked by membership interests join a consolidated group, the tax cost setting amount for the assets of each entity that becomes a subsidiary member is worked out by modifying the rules in Subdivision 705‑A, so that the amount reflects the cost to the group of acquiring the entities.

Table of sections

Application and object
705‑215 Application and object of this Subdivision

Modified application of Subdivision 705‑A
705‑220 Subdivision 705‑A has effect with modifications
705‑225 Order in which tax cost setting amounts are to be 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