Document ID: chunk:federal_register_of_legislation:C2010C00690:clause:1_3:p5
Version: federal_register_of_legislation:C2010C00690
Segment Type: clause
Provision Reference: sch 1 cl 3 (pt 5/20)
Character Range: 106920–109677

of step 6 in the table in section 705‑60, the step 6 amount is worked out by multiplying the sum of the losses mentioned in subsection (2) by the *general company tax rate.

 (2) The losses are the joining entity's losses of any *sort that:
 (a) were not *utilised by the joining entity for the income year in which the joining time occurred or any earlier income year; and
 (b) did not accrue to the joined group before the joining time (see subsection 705‑90(4)); and
 (c) are transferred to the *head company under Subdivision 707‑A; and
 (d) are not cancelled under section 707‑145.

705‑115  If head company becomes entitled to certain deductions—step 7 in working out allocable cost amount

 (1) For the purposes of step 7 in the table in section 705‑60, the step 7 amount is worked out using the following formula:
where:

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

owned deductions means the sum of all deductions for which the following requirements are satisfied:
 (a) the deduction is covered by subsection (2);
 (b) assuming the expenditure that gave rise to the deduction were instead a profit that was earned at the time the expenditure was incurred, a distribution of that profit would have been a distribution made to the joined group out of profits that accrued to the joined group before the joining time (see subsection 705‑90(5)).

 (2) This subsection covers any deduction to which the *head company becomes entitled under section 701‑5 as a result of the joining entity becoming a *subsidiary member of the joined group, other than a deduction for expenditure:
 (a) that is, forms part of or reduces, the cost of an asset of the joining entity that becomes an asset of the head company because subsection 701‑1(1) (the single entity rule) applies; or
 (b) to which section 110‑40 (about expenditure on assets acquired before 7.30 pm on 13 May 1997) applies; or
 (c) to the extent that, in applying subsection 705‑90(2) for the purpose of working out the step 3 amount in the table in section 705‑60, the expenditure reduced the amount of the undistributed profits mentioned in that subsection.

Preservation of application of Subdivision 165‑CC (about unrealised losses)

705‑120  Preservation of application of Subdivision 165‑CC (about unrealised losses)

Object

 (1) The object of this section is to transfer to the assets of the joining entity any potential application of Subdivision 165‑CC (about unrealised capital and revenue losses) that existed in respect of the *head company's *membership interests in the joining entity just before the joining time. This is done because the head company's cost of becoming the holder of the joining entity's assets is recognised