Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p25
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 25/45)
Character Range: 5970895–5973701

despite subsection (3), subsection 705‑65(4) (which prevents the later operation of value shifting etc. provisions) still applies to the *membership interests.

Non‑membership equity interests
 (5) For the purposes of this section, if, on becoming a *subsidiary member, a linked entity holds a *non‑membership equity interest in another linked entity, that interest is treated as if it were a *membership interest in that other linked entity.

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

Object
 (1) The object of this section is to modify the effect that section 705‑93 (step 3A of allocable cost amount) has in accordance with this Subdivision so that it takes account of *membership interests that linked entities hold in other linked entities at the time (the linked entity joining time) when the linked entities become *subsidiary members of the group.

Apportionment of step 3A amount among first level interposed entities
 (2) If:
 (a) under section 705‑93, in its application in accordance with this Subdivision, there is a step 3A amount for the purpose of working out the group's *allocable cost amount for a particular linked entity (the subject entity); and
 (b) at the linked entity joining time, one or more of the linked entities (the first level entities) in which the *head company holds *membership interests are interposed between the head company and the subject entity;
then the step 3A amount is apportioned among the first level entities and the subject entity on the following basis:
 (c) each first level entity has the following proportion of the step 3A amount:
  where:
  market value of all membership interests in subject entity means the *market value, at the linked entity joining time, of all *membership interests in the subject entity that are held by entities that become *members of the group at that time.
  market value of first level entity's direct and indirect membership interests in subject entity means so much of the *market value of all membership interests in the subject entity (as defined above) as is attributable to *membership interests that the first level entity holds directly, or indirectly through other linked entities; and
 (d) the subject entity has the remainder of the step 3A amount.

Membership interests in subsidiary members of group
 (3) In applying section 705‑93 for the purposes of this Subdivision, disregard paragraph 705‑93(1)(f) if:
 (a) the rollover asset mentioned in that section is a *membership interest in an entity that becomes a *subsidiary member at the linked entity joining time; and
 (b) the rollover asset is not held at that time by the entity that becomes the *head company of the group.
Note: The step