Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 705 - Tax cost setting amount for assets where entities become subsidiary members of consolidated groups  

Subdivision 705-D - Where multiple entities are linked by membership interests  

Application and object

SECTION 705-215   Application and object of this Subdivision  

Application

705-215(1)    
This Subdivision has effect for the head company core purposes set out in subsection 701-1(2) if:

(a) 2 or more entities (each of which is a linked entity ) become members of a ^* consolidated group at the same time as a result of an event that happens in relation to one of them; and

(b) the case is not covered by Subdivision 705-C .

Note:

This is the third exception to Subdivision 705-A : see paragraph 705-15(c) . In order for this Subdivision to have effect, one of the entities would need to hold directly or indirectly, just before the joining time, membership interests in all of the other entities.

Example:

Entities A and B are not members of a consolidated group, but members of such a group, together with entity A, jointly hold all the membership interests in entity B. Members of the group then acquire all the membership interests in entity A and as a result of this event both entities, which are linked by the membership interests that one holds in the other, become members of the group.

Object

705-215(2)    
The object of this Subdivision is to modify the rules in Subdivision 705-A (which basically determine the tax cost setting amount for assets of an entity joining an existing consolidated group) so that they take account of the different circumstances that apply where linked entities join.