Document ID: chunk:federal_register_of_legislation:C2014C00749:clause:2_28:p1
Version: federal_register_of_legislation:C2014C00749
Segment Type: clause
Provision Reference: sch 2 cl 28 (pt 1/2)
Character Range: 14389–17106

28  Section 705‑90
Repeal the section, substitute:

705‑90  Undistributed, frankable profits accruing to joined group before joining time—step 3 in working out allocable cost amount
 (1) For the purposes of step 3 in the table in section 705‑60, the step 3 amount is worked out in accordance with this section.

Undistributed profits
 (2) First work out the undistributed profits of the joining entity at the joining time. These are the amounts that, in accordance with *accounting standards, or statements of accounting concepts made by the Australian Accounting Standards Board, are retained profits of the joining entity that could be recognised in the joining entity's statement of financial position if that statement were prepared as at the joining time.

Extent to which dividends paid out of undistributed profits would be frankable
 (3) Then work out the extent to which the undistributed profits, if they had been distributed as dividends at the joining time, could have been franked in accordance with section 160AQF of the Income Tax Assessment Act 1936 on the assumptions in subsection (4) of this section.

Assumptions for purposes of subsection (3)
 (4) The assumptions are that the joining entity's franking account balance at the end of the income year that ends, or, if section 701‑30 applies, of the income year that is taken by subsection (3) of that section to end, at the joining time had been adjusted to take account of franking credits or franking debits that would arise if the following were paid just before the joining time:
 (a) the income tax, or *refund of income tax, on the joining entity's taxable income for that income year; and
 (b) any income tax, or refund of income tax, that has not yet been paid (regardless of whether it has become payable or due for payment) on the joining entity's taxable income for any earlier income year, other than one excluded by subsection (5).

Exclusion of certain income years where previous membership of a consolidated group
 (5) If the joining entity was previously a *subsidiary member of a *consolidated group, any income year earlier than the one that started, or, if section 701‑30 applies, the one that is taken by subsection (3) of that section to have started, when the joining entity ceased to be a subsidiary member of that group is excluded for the purposes of paragraph (4)(b) of this section.

Undistributed profits must have accrued to joined group and not recouped losses
 (6) Next:
 (a) work out the extent to which the undistributed profits that, if they had been distributed as dividends at the joining time, could have been so franked accrued to the joined group before the joining time (subsection (7) states what it means