Document ID: chunk:federal_register_of_legislation:C2010C00604:clause:1_2
Version: federal_register_of_legislation:C2010C00604
Segment Type: clause
Provision Reference: sch 1 cl 2
Character Range: 19044–20420

2  Section 705‑230
Repeal the section, substitute:

705‑230  Adjustments to restrict step 4 reduction of allocable cost amount to effective distributions to head company in respect of direct membership interests

Object

 (1) The object of this section is to ensure that, in working out the group's *allocable cost amount for the linked entities, the reduction under step 4 in the table in section 705‑60 (about pre‑formation time distributions out of certain profits) is made only for profits that have been effectively distributed to the *head company in respect of its direct *membership interests in the entities. This ensures consistency with the ordering rule in section 705‑225.

When section applies

 (2) This section applies to a distribution to the extent that the following conditions are satisfied:
 (a) the distribution is made by a linked entity;
 (b) in working out the group's *allocable cost amount for the linked entity there would, apart from this section, be a reduction under step 4 in the table in section 705‑60 for the distribution.

Step 4 reduction only if subject distribution is made to head company

 (3) There is no reduction as mentioned in subsection (2) for the distribution unless it is made to the *head company of the group.

Part 2—Consequential amendments relating to simplified imputation system

Income Tax Assessment Act 1997