Document ID: chunk:federal_register_of_legislation:C2014C00749:clause:2_28:p2
Version: federal_register_of_legislation:C2014C00749
Segment Type: clause
Provision Reference: sch 2 cl 28 (pt 2/2)
Character Range: 16872–19000

out the extent to which the undistributed profits that, if they had been distributed as dividends at the joining time, could have been so franked accrued to the joined group before the joining time (subsection (7) states what it means for a profit to accrue to the joined group before the joining time); and
 (b) then exclude those that recouped losses of any *sort that accrued to the joined group before the joining time (subsection (8) states what it means for a loss to accrue to the joined group before the joining time).
The result is the step 3 amount.

Profit accruing to the joined group before the joining time
 (7) A profit accrued to the joined group before the joining time if, on the following assumptions:
 (a) that it was distributed to holders of *membership interests as it accrued; and
 (b) that entities interposed between the *head company and the joining entity successively distributed any of it immediately after receiving it;
it would have been received by the entity that is the head company at the joining time, in respect of membership interests that it held continuously until that time either directly or indirectly through interposed entities.

Loss accruing to the joined group before the joining time
 (8) A loss 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.

Use of reliable estimates
 (9) In working out:
 (a) for the purposes of subsection (4), the amount of income tax, or *refund of income tax, on the joining entity's taxable income for a particular income year and the extent to which it has not yet been paid; or
 (b) for the purposes of subsection (7), the amount of a profit that accrued to the joined group during a particular period; or
 (c) for the purposes of subsection (8), the amount of a loss that accrued to the joined group during a particular period;
use the most reliable basis for estimation that is available.