Document ID: chunk:federal_register_of_legislation:C2025C00029:section:2:p63
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 2 (pt 63/66)
Character Range: 6484600–6487165

entity for indirect value shift
 (1) This section has effect for the purposes of working out the consequences (if any) of an *indirect value shift if the *losing entity or *gaining entity is the *head company of a *MEC group. (Subsection (3) has effect in addition to section 727‑455.)
 (2) An *equity or loan interest can be an *affected interest in the *head company only if it is:
 (a) an *equity or loan interest in the *top company for the MEC group; or
 (b) an *indirect equity or loan interest in the top company.
 (3) Subdivision 719‑K (MEC group cost setting rules: pooling cases) applies to the *MEC group, in relation to the first time referred to in that Subdivision as a trigger time that happens at or after the *IVS time, on the basis that:
 (a) what would, apart from this section, be the pooled cost amount for the purposes of the formulas in subsections 719‑570(1) and (2) is:
 (i) if the *head company is the *losing entity—reduced; or
 (ii) if the head company is the gaining entity—increased;
  by the amount of the indirect value shift; and
 (b) paragraph (a) of this subsection also affects the application of those formulas because of subsection 719‑570(3) (to work out the *reduced cost base of a *membership interest).

Cancelling loss on realisation event for direct or indirect interest in a subsidiary member of a MEC group

719‑775  Cancellation of loss
 (1) This section reduces to nil a loss that would otherwise be *realised for income tax purposes by a *realisation event that happens to an *equity or loan interest (the realised interest) in an entity (the first entity) when it is owned by another entity (the owner), if the conditions in subsections (2) and (4) are met.
 (2) The first condition is that, at some time during the period (the ownership period) when the owner owned the realised interest:
 (a) the first entity was a *subsidiary member of a *MEC group (except an *eligible tier‑1 company), and the owner was not a *member of the group; or
 (b) the realised interest was an *external indirect equity or loan interest in a subsidiary member of a MEC group (except an eligible tier‑1 company); or
 (c) the realised interest was an *equity or loan interest in an entity that, at that time:
 (i) owned an equity or loan interest in a subsidiary member of a MEC group (except an eligible tier‑1 company); and
 (ii) was not a member of the group; or
 (d) the realised interest was an equity or loan interest in an entity that owned at that time an external indirect equity or loan interest in a subsidiary member of a MEC