Document ID: chunk:federal_register_of_legislation:C2010C00690:clause:1_6:p9
Version: federal_register_of_legislation:C2010C00690
Segment Type: clause
Provision Reference: sch 1 cl 6 (pt 9/26)
Character Range: 196118–198813

is worked out by applying subsections 711‑65(3) to (6) as if:
 (a) a reference in those subsections to *membership interests that members of the old group hold in the leaving entity were a reference to the subject interests; and
 (b) assets (previously numbered assets) of the multiple exit entity consisting of other subject interests for which a number has been worked out as required by subsection (2) or (3) of this section were assets that the *head company holds at the leaving time because the entity is taken by section 701‑1 to be a part of the *head company; and
 (c) each previously numbered asset were treated as having a *pre‑CGT factor of 1.

Example: Companies A, B, C, D and E are all subsidiary members that leave the old group at the same time. Just before the leaving time, company A owned shares in company B and company C, and company B owned shares in companies D and E.

 First, work out company A's number for membership interests in company C and company B's number for membership interests in companies D and E.

 Next, work out company A's number for membership interests in company B, taking into account the number just worked out for company B's assets consisting of shares in companies D and E.

 Finally, work out the old group's number for membership interests in company A, taking into account the numbers worked out for its assets consisting of shares in companies B and C.

Note: Because of the deemed acquisition of the membership interests, this section is the only basis on which any of the subject interests can be pre‑CGT assets.

Allocation of the number to particular membership interests

 (5) The *head company must:
 (a) choose which particular *membership interests comprise any number worked out under this section; and
 (b) if any *membership interest that is so chosen is held by a multiple exit entity—inform that entity of the fact.

[The next Division is Division 719.]

Division 719—MEC groups

Guide to Division 719

719‑1  What this Division is about

       A MEC group and a potential MEC group each consist of certain Australian‑resident entities that are wholly‑owned subsidiaries of a foreign top company.
       A company that is a first‑tier subsidiary of the top company is a tier‑1 company.
       A MEC group cannot be formed unless there are at least 2 tier‑1 companies of the top company that are eligible to be members of the group.
       A MEC group becomes consolidated at a time chosen by the eligible tier‑1 companies.
       One of the eligible tier‑1 companies becomes the head company of the group.
       The remaining members of the group are the subsidiary members.

Table of sections

Basic concepts

719‑5