Document ID: chunk:federal_register_of_legislation:C2010C00605:clause:4_4:p8
Version: federal_register_of_legislation:C2010C00605
Segment Type: clause
Provision Reference: sch 4 cl 4 (pt 8/10)
Character Range: 78956–81832

first distribution that the second linked entity successively distributed as mentioned in paragraph 705‑95(a).

No step 4 reduction in respect of successive distribution of amount for which there has already been a step 4 reduction

 (3) If this section applies, there is no reduction as mentioned in paragraph (2)(b).

705‑235  Adjustment to allocation of allocable cost amount to take account of owned losses of certain linked entities

Object

 (1) The object of this section is to prevent a distortion under section 705‑35 in the allocation of *allocable cost amount to a linked entity where that entity has *membership interests in another linked entity that has certain tax losses.

Adjustment to allocation of allocable cost amount

 (2) If:
 (a) a linked entity has *membership interests in a second linked entity; and
 (b) in working out the group's *allocable cost amount for the second linked entity, an amount is required to be subtracted (the loss subtraction amount) under step 5 in the table in section 705‑60 (about losses accruing before becoming a subsidiary member of the group);
then, for the purposes of working out under section 705‑35 the *tax cost setting amount for the assets of the first linked entity, the *market value of the first linked entity's membership interests in the second linked entity is increased by the first linked entity's interest in the loss subtraction amount (see subsection (3)).

First entity's interest in loss subtraction amount

 (3) The first linked entity's interest in the loss subtraction amount is worked out using the formula:

705‑240  Modified application of section 705‑57

Object

 (1) The object of this section is to ensure that, in working out *tax cost setting amounts for *trading stock, *depreciating assets or *revenue assets of the linked entities, section 705‑57 (about loss of pre‑CGT status of certain membership interests) only applies if the *membership interests held directly by the *head company of the group are affected.

Modified application of section 705‑57—basic modification

 (2) For the purposes of applying section 705‑57 in accordance with this Subdivision, a reference in that section to a *membership interest that a *member of the joined group holds in the joining entity at the joining time is taken to be a reference to a membership interest that the *head company of the *consolidated group holds directly in a linked entity at the time the linked entity becomes a *subsidiary member.

Modified application of section 705‑57—additional modifications where section 705‑225 applies

 (3) Also, if a linked entity (the first linked entity) holds a *membership interest (the subject membership interest) in another linked entity (the second linked entity), section 705‑57 (as modified in accordance with subsection (2)) is to be applied in relation to the subject membership