Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p1
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 1/6)
Character Range: 6038680–6041599

3     (a) the joining entity ceases to be a *subsidiary member of the group at a time (the leaving time) after the joining time; and                                                                                                                the amount remaining mentioned in paragraph                        working out whether *CGT event L5 happens at the leaving time, and if so, the amount of any *capital gain under subsection 104‑520(3).
      (b) the entity's liabilities at the leaving time are the same as, or are reasonably connected to, the liabilities that it had at the joining time                                                                                             104‑520(1)(b)

Limits on application of loss
 (3) The loss can be applied under subsection (2) in relation to an income year only to the extent that it could be *utilised by the *head company for the income year, on the assumption that the *available fraction for the *bundle of losses was 1.
 (4) The amount of the loss that may be applied in accordance with item 1 of the table in subsection (2) cannot exceed the *gross forgiven amount of the debt to which the loss is attributable.
 (5) The amount of the loss that may be applied in accordance with item 2 of the table in subsection (2) cannot exceed the amount of the loss that is attributable to the deduction mentioned in that item.
 (6) For the purposes of item 3 of the table in subsection (2), if:
 (a) assuming that the joining entity ceased to be a *subsidiary member of the *consolidated group just after the joining time, the *head company of the group would make a *capital gain because of *CGT event L5; and
 (b) the sum of the losses in the *bundle of losses mentioned in paragraph (1)(c) exceeds the amount of the capital gain;
the total amount of those losses that may be applied in accordance with that item cannot exceed the amount of the capital gain.
 (7) To avoid doubt, a loss can be applied under this section only to the extent that it has not already been applied.

Division 709—Other rules applying when entities become subsidiary members etc.

Table of Subdivisions
709‑A Franking accounts
709‑B Imputation issues
709‑C Treatment of excess franking deficit tax offsets when entity becomes a subsidiary member of a consolidated group
709‑D Deducting bad debts

Subdivision 709‑A—Franking accounts

Guide to Subdivision 709‑A

709‑50  What this Subdivision is about
      Only the head company of a consolidated group has an operating franking account. The subsidiary members' franking accounts do not operate while they are subsidiary members. Debits or credits that would otherwise arise in subsidiary members' franking accounts arise instead in the head company's franking account.

Table of sections

Object
709‑55 Object of this Subdivision

Treatment of franking accounts at joining time
709‑60 Nil balance franking account for joining entity