Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p9
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 9/45)
Character Range: 5930137–5932819

section 707‑145.

705‑112  If joining entity transfers a FRT disallowed amount to the head company—step 6A in working out allocable cost amount
 (1) For the purposes of step 6A in the table in section 705‑60, the step 6A amount is worked out by multiplying the sum of the *FRT disallowed amounts mentioned in subsection (2) by the *corporate tax rate.
 (2) The *FRT disallowed amounts are the joining entity's FRT disallowed amounts that:
 (a) did not accrue to the joined group before the joining time (see subsection (3)); and
 (b) are transferred to the *head company under section 820‑590; and
 (c) are not cancelled under section 820‑592;
to the extent that they were not applied by the joining entity under paragraph 820‑56(2)(b) in respect of the income year in which the joining time occurred or any earlier income year.
 (3) For the purposes of subsection (2), a *FRT disallowed amount accrued to the joined group before the joining time if and to the extent that, assuming that as it arose it were instead a profit that was accruing, a distribution of that profit would have been a distribution made to the joined group out of profits that accrued to the joined group before the joining time.

705‑115  If head company becomes entitled to certain deductions—step 7 in working out allocable cost amount
 (1) For the purposes of step 7 in the table in section 705‑60, the step 7 amount is worked out using the following formula:
where:
acquired deductions means all deductions covered by subsection (2) that are not owned deductions.
owned deductions means the sum of all deductions for which the following requirements are satisfied:
 (a) the deduction is covered by subsection (2);
 (b) assuming the expenditure that gave rise to the deduction were instead a profit that accrued at the time the expenditure was incurred, a distribution of that profit would have been a distribution made to the joined group out of profits that accrued to the joined group before the joining time (see subsection 705‑90(7)).
 (2) This subsection covers any deduction to which the *head company becomes entitled under section 701‑5 as a result of the joining entity becoming a *subsidiary member of the joined group, other than a deduction for expenditure:
 (a) that is, forms part of or reduces, the cost of an asset of the joining entity that becomes an asset of the head company because subsection 701‑1(1) (the single entity rule) applies; or
 (b) to which section 110‑40 (about expenditure on assets acquired before 7.30 pm on 13 May 1997) applies; or
 (c) to the extent that the expenditure reduced the undistributed profits comprising the step 3 amount in the table in section 705‑60.