Document ID: chunk:federal_register_of_legislation:C2010C00605:clause:4_4:p7
Version: federal_register_of_legislation:C2010C00605
Segment Type: clause
Provision Reference: sch 4 cl 4 (pt 7/10)
Character Range: 76426–79219

of that other linked entity.

Note 1: Subsection 705‑65(1) adds together amounts worked out in accordance with section 705‑65 representing the cost of the membership interests that each member of the group holds in the linked entity. If any of those membership interests is held by another linked entity, subsection (3) of this section will replace the amount otherwise applicable with the tax cost setting amount that will have been worked out for the interests in accordance with subsection (2) of this section.

Note 2: The tax cost setting amount worked out for the membership interests has no relevance other than for the purpose mentioned in subsection (3) of this subsection. This is because, under the single entity principle, intra group membership interests are ignored while entities are members of the group. If an entity ceases to be a member, section 701‑15 and Division 711 set the tax cost of membership interests in the entity at that time.

Value shifting etc. provisions not to apply to later CGT events involving membership interests

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

Rights and options to acquire membership interests

 (5) For the purposes of this section, if, on becoming a *subsidiary member, a linked entity holds a right or option (including a contingent right or option), created or issued by another linked entity, to acquire a *membership interest in that other linked entity, that right or option is treated as if it were a membership interest in that other linked entity.

705‑230  Adjustment in working out step 4 of allocable cost amount for successive distributions through interposed linked entities

Object

 (1) The object of this section is to ensure that, in working out the group's *allocable cost amount for the linked entities, there is only one reduction under step 4 in the table in section 705‑60 (about pre‑formation time distributions out of certain profits) for distributions of the same profits.

When section applies

 (2) This section applies if, apart from this section:
 (a) in working out the group's *allocable cost amount for a linked entity, there would be a reduction under step 4 in the table in section 705‑60 for a distribution (the first distribution) made by the entity; and
 (b) in working out the group's allocable cost amount for a second linked entity, there would also be a reduction under that step for any of the 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,