Document ID: chunk:federal_register_of_legislation:C2005A00162:clause:3_1:p2
Version: federal_register_of_legislation:C2005A00162
Segment Type: clause
Provision Reference: sch 3 cl 1 (pt 2/4)
Character Range: 14509–17177

whether the test company would meet those conditions);
 (b) section 719‑465 (which is about assuming that the test company would have failed to meet those conditions in certain circumstances).

Note 1: Even though subsection (2) of this section raises the issue whether the test company meets the conditions in section 165‑123, that is determined by reference to:

(a) the ownership test period for the head company of the MEC group; and

(b) the debt owed to the head company.

Note 2: If this section is applying for the purposes of working out whether the head company could have deducted a debt as described in subsection 709‑215(2), section 709‑215 affects what is the ownership test period for the purposes of section 165‑123 as it applies for those purposes.

Head company's failure to meet conditions in section 165‑123

 (3) The *head company is taken to fail to meet a condition in section 165‑123 only at:
 (a) the first time the test company would have failed to meet the condition on the relevant assumptions mentioned in subsection (2); or
 (b) the *test time described in section 166‑40 for the test company, if:
 (i) Division 166 is relevant to working out whether the test company met the conditions in section 165‑123 on the relevant assumption mentioned in paragraph (2)(a); and
 (ii) the test company is not assumed under section 719‑465 to fail to meet the condition before the test time.

Note 1: If the head company is taken to fail to meet a condition in section 165‑123, the head company will not be able to deduct the debt unless that company meets the condition in section 165‑126 by satisfying the same business test. That test applies to the head company (and not the test company).

Note 2: Section 719‑285 may affect whether the head company satisfies the same business test if there has been a change in the identity of the head company of the group during the ownership test period.

Same business test for head company under Division 166

 (4) If section 166‑40 directly affects whether the *head company can deduct the debt, the subsection of that section that requires the *same business test be applied to a particular *business operates as if it required that test to be applied to the business the head company carried on just before the time described in subsection (3) of this section.

Note: Section 166‑40 has an indirect effect on whether the head company can deduct the debt so far as that section affects whether the test company meets the conditions in section 165‑123 and therefore whether the head company is taken to meet those conditions.

719‑460  Assumptions about nothing happening to affect direct and indirect