Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p21
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 21/45)
Character Range: 5960749–5963480

only exists for part of the income year, section 701‑30 (about an entity not being a subsidiary member of a group for a whole income year) applies in relation to the acquired group for the head company core purposes in the same way as it applies to work out the taxable income, tax payable on that taxable income and loss of each *sort for an entity for a non‑membership period.

Modified application of Subdivision 705‑A in relation to acquiring group

705‑185  Subdivision 705‑A has effect with modifications
 (1) Subdivision 705‑A has effect in relation to the acquiring group for the head company core purposes set out in subsection 701‑1(2) as if:
 (a) the only *member of the acquired group that is a joining entity of the acquiring group were the entity that, just before the acquisition time, was the *head company of the acquired group; and
 (b) the operation of this Part for the head company core purposes in relation to the head company and the entities that were *subsidiary members of the acquired group continued to have effect for the purposes of Subdivision 705‑A.
Note 1: This means that for Subdivision 705‑A purposes the subsidiary members of the acquired group are treated as part of the head company of that group, and as a result their assets (other than e.g. internal membership interests) have their tax costs set at the acquisition time.
Note 2: It also means e.g. that for Subdivision 705‑A purposes the terminating values of the assets of those subsidiary members are worked out as if the assets were those of the head company at the acquisition time, and hence will be based (if applicable) on the tax cost setting amounts for assets that were set at the time entities became subsidiary members of the acquired group.
 (2) However, that effect of Subdivision 705‑A is subject to modifications set out in this Subdivision.
Note: The modifications of Subdivision 705‑A made in this Subdivision constitute the second exception to Subdivision 705‑A: see paragraph 705‑15(b).

Modifications of Subdivision 705‑A for the purposes of this Subdivision

705‑195  Modified application of subsection 705‑65(6)

Object
 (1) The object of this section is to ensure that certain *non‑membership equity interests held by *members of the acquiring group that are part of the cost of acquiring the acquired group are taken into account in working out the acquiring group's *allocable cost amount for the acquired group.

Non‑membership equity interests
 (2) Subsection 705‑65(6) has effect 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