Document ID: chunk:federal_register_of_legislation:C2010C00605:clause:5_6:p2
Version: federal_register_of_legislation:C2010C00605
Segment Type: clause
Provision Reference: sch 5 cl 6 (pt 2/3)
Character Range: 89230–91914

out the step 1 amount under section 705‑65.

      Method statement
           Step 1. Add up:

                (a) each amount settled on the trust before or at the joining time; and
                (b) the *market value of each item of property settled on the trust before or at the joining time, worked out as at when the item was settled;

            except to the extent that that amount or market value forms part of the *cost base of a *membership interest in the trust that was taken into account in working out the step 1 amount under section 705‑65.
           Step 2. Work out how much of the step 1 amount would have been paid in respect of the discretionary interests if, at the joining time:

                (a) the entire trust capital and trust income had been realised and distributed; and
                (b) the trust had ended.

                  Note: This may involve determining how a power of appointment would have been exercised. Section 713‑50 lists matters to have regard to in determining this.
           Step 3. Reduce the step 2 amount by so much of it as:

                (a) would have been included in the assessable income of any *member of the trust who owned any of the discretionary interests at the joining time; or
                (b) would have been taken into account in working out a *capital gain or *capital loss made by such a member.

           Step 4. Work out how much of the step 1 amount consists of one or more of these:

                (a) an amount settled on the trust directly by the *head company of the *consolidated group (whether or not the group was in existence when the amount or item was settled on the trust);
                (b) an amount settled on the trust directly by any other entity not excluded by subsection (3) (which covers entities that are not independent and unconnected donors to the trust);
                (c) the *market value of an item of property settled on the trust directly by the head company;
                (d) the market value of an item of property settled on the trust directly by any other entity not excluded by subsection (3).

           Step 5. The step 1 amount worked out under section 705‑65 is increased by the lesser of:

                (a) the step 3 amount worked out under this method statement; and
                (b) the step 4 amount worked out under this method statement.
 (3) This subsection excludes these entities for the purposes of step 4 of the method statement in subsection (2):

Entities that are not independent and unconnected donors to the trust
Item                                                                   This entity is excluded: