Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p6
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 6/19)
Character Range: 5849236–5851902

for the preservation of this alignment until the entity ceases to be a *subsidiary member, in order to:
 (a) prevent double taxation of gains and duplication of losses; and
 (b) remove the need to adjust costs of membership interests in response to transactions that shift value between them, as the required adjustments occur automatically.
Note: Under Division 711, the alignment is preserved by recognising the head company's cost of membership interests in the entity if it ceases to be a subsidiary member of the group as the cost of its assets reduced by its liabilities.

705‑15  Cases where this Subdivision does not have effect
  This Subdivision does not have effect if any of the following exceptions applies:
 (a) the first exception is where the joining entity becomes a *member of the joined group because it is a member of that group at the time it comes into existence as a *consolidated group;
Note: See Subdivision 705‑B for rules about the treatment of assets if entities become members in circumstances covered by this exception.
 (b) the second exception is where all of the members of another consolidated group become members of the joined group as a result of the *acquisition of *membership interests in the *head company of the joining group;
Note: See Subdivision 705‑C for rules about the treatment of assets if entities become members in circumstances covered by this exception.
 (c) the third exception is where:
 (i) the joining entity and one or more other entities become members of the joined group at the same time as a result of an event that happens in relation to one of them; and
 (ii) the case is not covered by the second exception;
Note: See Subdivision 705‑D for rules about the treatment of assets if entities become members in circumstances covered by this exception.

Tax cost setting amount for assets that joining entity brings into joined group

705‑20  Tax cost setting amount worked out under this Subdivision
  If this Subdivision has effect, for the purposes of item 1 in the table in section 701‑60 (Tax cost setting amount) the *tax cost setting amount for an asset whose *tax cost is set at the time the joining entity becomes a *subsidiary member of the joined group is worked out under this Subdivision.

705‑25  Tax cost setting amount for retained cost base assets
 (1) This section states what the *tax cost setting amount is for a *retained cost base asset.

Australian currency
 (2) If the *retained cost base asset is covered by paragraph (a), (b) or (ba) of the definition of that expression and is not covered by another subsection of this section, its *tax cost setting amount is equal to the amount