Income Tax Assessment Act 1997

Part 3-90 inserted by No 68 of 2002, s 3 and Sch 1 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec 700-1 of the Income Tax (Transitional Provisions) Act 1997 ).

Div 711 inserted by No 68 of 2002, s 3 and Sch 1 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec 700-1 of the Income Tax (Transitional Provisions) Act 1997 ).

S 711-70 and 711-75 substituted for s 711-70 by No 56 of 2010, s 3 and Sch 5 item 30, effective 3 June 2010. For application provision, see note under section 705-125(1) . S 711-70 formerly read:

SECTION 711-70 Membership interests treated as having been acquired before 20 September 1985 - multiple exit case  
711-70(1)
If 2 or more entities ( multiple exit entities ) cease to be ^* subsidiary members of the old group at the same time because of an event happening in relation to one of them (other than where Subdivision 705-C applies), a number of the ^* membership interests ( subject interests ) held in any multiple exit entity by:

(a) ^* members of the old group; or

(b) other multiple exit entities; or

(c) any combination of paragraphs (a) and (b);

are taken to have been acquired before 20 September 1985.

 View history note

 Hide history note

History

S 711-70(1) amended by No 117 of 2002, s 3 and Sch 4 item 7, by inserting " (other than where Subdivision 705-C applies) " , effective 24 October 2002 and applicable on and after 1 July 2002 (see sec 700-1 of the Income Tax (Transitional Provisions) Act 1997 ).

Numbers to be worked out first for bottom entities

711-70(2)
Numbers are to be worked out first for subject interests in multiple exit entities that do not themselves hold any of the subject interests in other multiple exit entities.

Numbers to be worked out progressively up to those subject interests held only by members of the old group

711-70(3)
If the holders of other subject interests are or include multiple exit entities, numbers must be worked out for the former subject interests before both the latter and any subject interests whose holders consist entirely of ^* members of the old group.

How to work out the numbers

711-70(4)
The number for subject interests in a particular multiple exit entity that is required to be worked out under subsection (2) or (3) 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

711-70(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.

Modification if leaving entity is a trust

711-70(6)
A ^* membership interest in a trust that is one of the multiple exit entities is not taken into account under this section unless the membership interest is either a unit or an interest in the trust.

 View history note

 Hide history note

History

S 711-70(6) inserted by No 117 of 2002, s 3 and Sch 5 item 5, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec 700-1 of the Income Tax (Transitional Provisions) Act 1997 ).

S 711-70 inserted by No 68 of 2002, s 3 and Sch 1 item 2, effective 24 October 2002 and applicable on and after 1 July 2002 (see sec 700-1 of the Income Tax (Transitional Provisions) Act 1997 ).