Document ID: chunk:federal_register_of_legislation:C2025C00029:section:5:p3
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 5 (pt 3/4)
Character Range: 6081926–6084562

leaving entity) ceases to be a *subsidiary member of a *consolidated group (the old group) at a particular time (the leaving time).

Object
 (2) The object of this Division is, when entities cease to be *subsidiary members, to preserve the alignment of the *head company's costs for *membership interests in entities and their assets that is established when entities become subsidiary members.
Note: The reasons for preserving this alignment are set out in subsection 705‑10(3).
 (3) This is achieved by recognising the *head company's cost for those interests, just before the leaving time, as an amount equal to the cost of the leaving entity's assets at the leaving time reduced by the amount of its liabilities.
 (4) If multiple entities cease to be *subsidiary members at the same time, the cost of any *membership interests that one holds in another is treated in a similar way.

Tax cost setting amount for membership interests etc.

711‑10  Tax cost setting amount worked out under this Division
  If this Division applies, the amount of the following is worked out under the Division:
 (a) the *tax cost setting amount for the purposes of item 2 in the table in section 701‑60 for each *membership interest in the leaving entity that *members of the old group held; and
 (b) if 2 or more entities cease to be *subsidiary members of the group at the same time because of an event happening in relation to one of them—the tax cost setting amount for the purposes of item 4 in the table in that section for each membership interest that the leaving entity holds in any of the other entities.

711‑15  Tax cost setting amount where no multiple exit
 (1) The *tax cost setting amount for each *membership interest in the leaving entity that *members of the old group held, where paragraph 711‑10(b) does not apply, is worked out by:
 (a) first, working out the old group's *allocable cost amount for the leaving entity in accordance with section 711‑20; and
 (b) next, if there is more than one class of membership interests in the leaving entity—allocating the allocable cost amount to each class in proportion to the *market value of all of the membership interests in the class; and
 (c) next, allocating the result under paragraph (a) or (b) to each of the membership interests, or membership interests in the class, by dividing the result by the number of those membership interests; and
 (d) finally, if the leaving entity is a trust—for each membership interest in the trust that satisfies these conditions:
 (i) it is neither a unit nor an interest in the trust;
 (ii) the member of the old group that held it began to hold