(a) the following income year (the joining adjustment year):

if the combining entity is the *head company and the joining time occurs at the start of an income year—the income year before that income year; or

if the combining entity is the head company and subparagraph (i) does not apply—the income year in which the joining time occurs; or

in any other case—the income year that ends, or, if section 701-30 applies, the income year that is taken by subsection (3) of that section to end, at the joining time; and

(a) the following income year (the leaving adjustment year):

if the separating entity is the *head company—the income year in which the leaving time occurs; or

in any other case—the income year that starts, or, if section 701-30 applies, the income year that is taken by subsection (3) of that section to start, at the leaving time.

the entity *acquired, at or before 11.45 am, by legal time in the Australian Capital Territory, on 21 September 1999, a *depreciating asset to which Division 40 applies and held the asset continuously until the entity became a *subsidiary member of the group; and

the joining entity *acquired, at or before 11.45 am, by legal time in the Australian Capital Territory, on 21 September 1999, a *depreciating asset to which Division 40 applies and held the asset continuously until the joining time; and

subsection (5) does not apply to the asset; and

the *members of the joined group had, just before the joining time, *disposed of their *membership interest in the joining entity; and

the consideration received by the members for the disposal were equal to the *market value of the membership interest at that time;

in working out the *reduced cost base of the *membership interest for the purposes of subsection (1), a reduction has taken place under subsection 165-115ZA(3) (about alterations in ownership or control of loss companies); and

the reduction is to some extent attributable to so much of an amount that was taken into account both in working out the amount of the reduction and in working out:

the step 5 amount under section 705-100; or

the step 6 amount under section 705-110;

if subparagraph (b)(i) applies—the amount of that reduction; or

if subparagraph (b)(ii) applies—the amount of that reduction multiplied by the *general company tax rate.

in working out the *reduced cost base of a *member’s asset for the purposes of subsection (2), a reduction has taken place under subsection 165-115ZA(3) (about alterations in ownership or control of loss companies); and

the reduction is to some extent attributable to so much of an amount that was taken into account both in working out the amount of the reduction and in working out:

the step 5 amount under section 705-100; or

the step 6 amount under section 705-110;

if subparagraph (b)(i) applies—the amount of that reduction; or

if subparagraph (b)(ii) applies—the amount of that reduction multiplied by the *general company tax rate.

the income tax, or *refund of income tax, on the joining entity’s taxable income for that income year; and

any income tax, or refund of income tax, that has not yet been paid (regardless of whether it has become payable or due for payment) on the joining entity’s taxable income for any earlier income year, other than one excluded by subsection (5).

work 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

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).

that it was distributed to holders of *membership interests as it accrued; and

that entities interposed between the *head company and the joining entity successively distributed any of it immediately after receiving it;

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

for the purposes of subsection (7), the amount of a profit that accrued to the joined group during a particular period; or

for the purposes of subsection (8), the amount of a loss that accrued to the joined group during a particular period;

to the extent that the expenditure reduced the undistributed profits comprising the step 3 amount in the table in section 705-60.

(a) before the formation time, there was a roll-over under Subdivision 126-B or Income Tax Assessment Act 1936 in relation to a *CGT event (the head company roll-over event) that happened in relation to an asset (the head company roll-over asset), where:section 160ZZO of the

(i) an entity (the head company roll-over recipient) that becomes a *subsidiary member of the group was the recipient company in relation to the roll-over; and

the originating company in relation to that roll-over was the entity that becomes the *head company of the group; and

between the roll-over and the formation time, no other CGT event happened in relation to the head company roll-over asset:

for which there was another roll-over satisfying the requirements of paragraph (a); or

(ii) for which there was not a roll-over under Subdivision 126-B or Income Tax Assessment Act 1936; andsection 160ZZO of the

the head company roll-over asset is not a *pre-CGT asset at the formation time; and

(d) the sum of the *cost bases of all of the *head company’s *CGT assets just before the head company roll-over event exceeded or was less than the sum of the cost bases of all of the head company’s CGT assets just after the head company roll-over event (the excess or shortfall being the head company roll-over adjustment amount).

becomes a *subsidiary member of the group at the formation time; and

is interposed at that time between the *head company and the head company roll-over recipient; and

is the first or only such interposed entity;

(a) in working out the group’s *allocable cost amount for an entity that becomes a *subsidiary member of the group at the formation time, there would be a reduction under step 4 in the table in first distribution) made by the entity; andsection 705-60 for a distribution (the

in working out the group’s *allocable cost amount for a second entity that becomes a *subsidiary member of the group at that time, there would also be a reduction under that step for any of the first distribution that the second entity successively distributed as mentioned in paragraph 705-95(a).

an entity becomes a *subsidiary member of the group at the formation time; and

the entity has *membership interests in a second entity that becomes a subsidiary member of the group at that time; and

(c) in working out the group’s *allocable cost amount for the second entity an amount is required to be subtracted (the loss subtraction amount) under step 5 in the table in section 705-60 (about losses accruing before becoming a subsidiary member of the group);

the asset’s *market value; and

the joining entity’s *terminating value for the asset.

the allocation is to be in proportion to the *market values of the assets;

the amount allocated to an item of *trading stock, to a *depreciating asset or to a *revenue asset must not cause its *tax cost setting amount to contravene subsection (1);

any of the amount that cannot be allocated is to be reallocated, to the maximum extent possible, among the remaining reset cost base assets (other than excluded assets) by applying this subsection a further one or more times.

the income year starts after the joining time; and

those excess foreign tax credits are from an income year ending before the joining time.

an entity was a *subsidiary member of a *consolidated group for all or part of an income year; and

(b) the assessable income of the *head company of the group for that income year included foreign income (within the meaning of the Income Tax Assessment Act 1936); and

the entity paid, and was personally liable for, foreign tax (within the meaning of that Act) in respect of that foreign income (whether or not the entity was a subsidiary member of the group at the time of payment).

the *head company had paid and been personally liable for the foreign tax; and

the entity had not paid and had not been personally liable for the foreign tax.

foreign tax that an entity paid, and was personally liable for, in respect of foreign income included in the entity’s assessable income; and

the amount of Australian tax payable (worked out as described in that section) in respect of the foreign income.

(a) an entity (the joining entity) becomes a *subsidiary member of a *consolidated group at a time (the joining time); and

the joining time is:

before the start of that income year; and

(ii) after the start of an earlier income year (the earlier year); and

(c) the joining entity has *excess foreign tax credits (the transfer credits) from the earlier year.

the *head company of the group is taken to have the transfer credits; and

(b) the joining entity is taken not to have the transfer credits; and

if, apart from paragraph (a), the head company has *excess foreign tax credits from the earlier year—the transfer credits are taken to be included in those excess foreign tax credits.

the *head company’s foreign income of that class for an income year were the whole of the head company’s foreign income for that year; and

the joining entity’s foreign income of that class for an income year were the whole of the joining entity’s foreign income for that year.

(a) an entity (the joining entity) is a *subsidiary member of a *consolidated group for some but not all of an income year (the joining year); and

(b) there are one or more periods in the joining year (each of which is a non-membership period) during which the entity is not a subsidiary member of any *consolidated group.

if the joining year starts at the same time as the earliest of those non-membership periods:

(i) subsection 160AFE(2) of the Income Tax Assessment Act 1936 operates in relation to the joining entity for that non-membership period; and

(ii) subsection 160AFE(2) of that Act does not operate in relation to the joining entity for the later non-membership periods (if any);

(b) otherwise—subsection 160AFE(2) of that Act does not operate in relation to the joining entity for any of the non-membership periods.

(a) the attribution surplus (if any) for an attribution account entity (within the meaning of Part X of the Income Tax Assessment Act 1936) in relation to the joining company just before the joining time;

(b) the attributed tax account surplus (if any) for an attribution account entity (within the meaning of Part X of the Income Tax Assessment Act 1936) in relation to the joining company just before the joining time;

(c) the FIF attribution surplus (if any) for a FIF attribution account entity (within the meaning of Income Tax Assessment Act 1936) in relation to the joining company just before the joining time;Part XI of the

(d) the FIF attributed tax account surplus (if any) for a *FIF (within the meaning of Income Tax Assessment Act 1936) in relation to the joining company just before the joining time.Part XI of the

(a) a company (the joining company) becomes a *subsidiary member of a *consolidated group at a time (the joining time); and

just before the joining time there was an attribution surplus for an attribution account entity in relation to the joining company for the purposes of that Part; and

just before the joining time the joining company’s attribution account percentage in relation to the attribution account entity for the purposes of that Part was more than nil.

(a) a company (the joining company) becomes a *subsidiary member of a *consolidated group at a time (the joining time); and

(b) for the purposes of that Part, the FIF attribution account percentage of the joining company in relation to a FIF attribution account entity that is a *FIF is more than nil at the time (the surplus time) just before the joining time.

the head company had acquired the interest or interests mentioned in that paragraph during that period (so far as those interests are held by the head company because the joining company became a *subsidiary member of the group); and

the amount or value of the consideration paid or given by the head company in respect of the acquisition was equal to the amount worked out under paragraph 538(2)(a) of that Act in relation to the joining company in relation to the FIF in respect of the notional accounting period mentioned in subsection (2) of this section.

apply if a company joins a consolidated group during a notional accounting period of a FIF in which the company has an interest; and

allow the appropriate calculation of amounts attributed under FIF rules to the head company and joining company before and after the joining time; and

mean that foreign investment fund income that accrued to the joining company from the FIF will be included in the joining company’s assessable income and will give rise to a FIF attribution credit, and may also give rise to a FIF attribution debit, in relation to the joining company; and

mean that the FIF attribution surplus and the FIF attributed tax account surplus for the FIF attribution account entity in relation to the joining company at the surplus time will take account of credits and debits arising at the credit/debit time and earlier.

(a) the attribution surplus (if any) for an attribution account entity (within the meaning of Part X of the Income Tax Assessment Act 1936) in relation to the head company just before the leaving time;

(b) the attributed tax account surplus (if any) for an attribution account entity (within the meaning of Part X of the Income Tax Assessment Act 1936) in relation to the head company just before the leaving time;

(c) the FIF attribution surplus (if any) for a FIF attribution account entity (within the meaning of Income Tax Assessment Act 1936) in relation to the head company just before the leaving time;Part XI of the

(d) the FIF attributed tax account surplus (if any) for a *FIF (within the meaning of Income Tax Assessment Act 1936) in relation to the head company just before the leaving time.Part XI of the

(a) a company (the leaving company) ceases to be a *subsidiary member of a *consolidated group at a time (the leaving time); and

just before the leaving time there was, for the purposes of that Part, an attribution surplus for an attribution account entity in relation to the *head company of the group; and

at the leaving time the leaving company’s attribution account percentage in relation to the attribution account entity for the purposes of that Part is more than nil.

(a) the transferor company is the *head company of a *consolidated group at a time (the surplus time); and

for the purposes of that Part, the FIF attribution account percentage of the transferor company in relation to a FIF attribution account entity that is a *FIF is more than nil at the surplus time; and

(c) another company (the leaving company) ceases to be a *subsidiary member of the group at the time (the leaving time) just after the surplus time; and

for the purposes of that Part, the leaving company’s FIF attribution account percentage in relation to that FIF attribution account entity is more than nil at the leaving time.

the time when a notional accounting period of the FIF in relation to the transferor company would have ended apart from this section;

the time when the period ends because of another application of this section.

the leaving company had acquired the interest or interests mentioned in that paragraph during that period (so far as those interests are held by the leaving company because it ceased to be a *subsidiary member of the group); and

the amount or value of the consideration paid or given by the leaving company in respect of the acquisition was equal to the amount worked out under paragraph 538(2)(a) of that Act in relation to the transferor company in relation to the FIF in respect of the notional accounting period mentioned in subsection (2) of this section.

apply if a company leaves a consolidated group during a notional accounting period of a FIF in which the company has an interest; and

allow the appropriate calculation of amounts attributed under FIF rules to the transferor company and leaving company before and after the leaving time; and

mean that foreign investment fund income that accrued to the transferor company from the FIF will be included in the transferor company’s assessable income and will give rise to a FIF attribution credit, and may also give rise to a FIF attribution debit, in relation to the transferor company; and

mean that the FIF attribution surplus and the FIF attributed tax account surplus for the FIF attribution account entity in relation to the transferor company at the surplus time will take account of credits and debits arising at the credit/debit time and earlier.

(a) the group is a transitional group; and

(b) each entity that became a subsidiary member of the group on the day it came into existence is a transitional entity.

(a) the group is a transitional group if at least one entity that became a subsidiary member of the group on the day the group came into existence is a transitional entity; and

an entity is a transitional entity if:

(i) at no time after 1 July 2002 and before the group came into existence was the entity a wholly-owned subsidiary of the entity (the future head company) that became the head company of the group; or

at some time during that period, the entity was a wholly-owned subsidiary of the future head company and it remained such from the earliest time after 1 July 2002 when it was a wholly-owned subsidiary of the future head company until the group came into existence.

(a) the group is a transitional group if at least one entity that became a subsidiary member of the group on the day the group came into existence is a transitional entity; and

(b) an entity is a transitional entity if:

just before 1 July 2003, it was a wholly-owned subsidiary of the future head company; and

it remained such from the earliest time after 1 July 2002 when it was a wholly-owned subsidiary of the future head company until the group came into existence.

(a) a provision of the Income Tax Assessment Act 1997; or

a consolidated group’s allocable cost amount for an entity;

the head company adjusted allocable amount for the non-chosen subsidiary (see subsection (4)); and

for each sub-group (see subsection (6)) that exists in relation to the non-chosen subsidiary—the sub-group’s notional allocable cost amount (see subsection(5)) for the non-chosen subsidiary.

the holding of all sub-group membership interests were disregarded; and

only the following proportion of each of the step 2 to step 7 amounts in the table in section 705-60 was taken into account:

the consolidated group came into existence at the same time as the transitional group and consisted only of the non-chosen subsidiary and the entities comprising the sub-group; and

the chosen transitional entity in the sub-group were the head company of the consolidated group; and

the only membership interests that any entity in the sub-group held in any other member of the consolidated group were the sub-group membership interests (see subsection (6)) in relation to the sub-group; and

only the following proportion of each of the step 2 to step 7 amounts in the table in section 705-60 was taken into account:

(a) the chosen transitional entity and each interposed non-chosen subsidiary comprise a sub-group in relation to the non-chosen subsidiary (unless the non-chosen subsidiary is included in a sub-group in relation to another non-chosen subsidiary); and

(b) the following membership interests are the sub-group membership interests in relation to the sub-group:

the membership interests that the chosen transitional entity holds directly in the non-chosen subsidiary or in any of the interposed non-chosen subsidiaries;

the membership interests that each interposed non-chosen subsidiary holds directly in the non-chosen subsidiary or in any of the other interposed non-chosen subsidiaries.

subsections (3) and (4), and paragraph (6)(b), of that section were disregarded; and

(b) it were a requirement of that section that, if any additional undistributed profits resulting from paragraph (a) of this subsection were distributed as dividends just before the group came into existence, the head company and each other transitional entity interposed between the head company and the transitional entity would be entitled to a rebate of income tax under Income Tax Assessment Act 1936 on the dividends.section 46 or 46A of the

the profits were not subject to income tax because of deductions for the asset’s decline in value;

the decline in value represented the over-depreciation of the asset;

(c) the deductions for the decline in value do not form part of a tax loss covered by the step 5 amount mentioned in step 5 in the table in Income Tax Assessment Act 1997 in working out the transitional group’s allocable cost amount for the transitional entity.section 705-60 of the

after 16 May 2002 and before the transitional group came into existence, a CGT event happened in relation to an asset for which there was:

(i) a roll-over under Subdivision 126-B of the Income Tax Assessment Act 1997; or

roll-over relief under section 40-340 of that Act in a case covered by item 4 of the table in subsection (1) of that section; and

the cost base or reduced cost base of that asset or any other asset that:

became an asset of the head company when the transitional group came into existence because subsection 701-1(1) (the single entity rule) of that Act applies; or

was otherwise an asset of the head company at that time;

the asset must have become that of the head company of the transitional group because subsection 701-1(1) of that Act applied in relation to a transitional entity; and

(b) reduction amount) the tax cost setting amount for the asset.section 705-50 of that Act must have reduced by an amount (the

an entity ceases to be a subsidiary member of the transitional group; and

just before the transitional group came into existence, the entity that became the head company held a pre-CGT asset; and

that holding of the asset did not occur as a result of a CGT event:

(i) for which there was a roll-over under Subdivision 126-B of the Income Tax Assessment Act 1997; and

that occurred after 11.45 am by legal time in the Australian Capital Territory on 21 September 1999; and

(d) just before the entity ceases to be a subsidiary member of the group, the asset is still a pre-CGT asset and is held by the head company only because the entity is taken by subsection 701-1(1) (the single entity rule) of the Income Tax Assessment Act 1997 to be a part of the head company.

an entity becomes a subsidiary member of a consolidated group; and

just before it does so, section 40-77 of this Act applies to an asset that it holds.

(a) an asset of the head company because subsection 701-1(1) (the single entity rule) of the Income Tax Assessment Act 1997 applies; or

an asset of another entity, where it became such an asset as a result of that subsection ceasing to apply on the entity ceasing to be a subsidiary member of the group;

subsection 40-77(1) continues to apply to the asset; and

subsection 40-77(2) continues to apply to the asset, but applies as if the reference in that subsection to the cost of the asset were a reference to the cost worked out on the basis that the asset were acquired for a payment equal to its tax cost setting amount; and

subsection 40-77(3) continues to apply to the asset, but applies as if the reference in that subsection to the amount included in assessable income under subsection 40-285(1) of that Act were a reference to the amount so worked out on the basis that the asset were acquired for a payment equal to its tax cost setting amount.

an entity becomes a subsidiary member of a consolidated group; and

(b) because subsection 701-1(1) (the single entity rule) of the Income Tax Assessment Act 1997 applies, an asset of the entity becomes an asset of the head company of the group; and

a balancing adjustment event happens in relation to the asset while it is an asset of the head company;

the available fraction for a bundle of other losses is worked out, because of section 707-325, as if there were added to the modified market value of the real loss-maker of the other losses an amount worked out under that section by reference to the value donor’s modified market value; and

each other company (if any) for which it is the case that the available fraction for the bundle is worked out, because of another application of section 707-325, as if there were added to the real loss-maker’s modified market value an amount worked out by reference to the company.

(a) a consolidated group came into existence during an income year (the current year); and

the current year ended before 1 July 2004; and

(c) Income Tax Assessment Act 1936 as amended by the New Business Tax System (Consolidation, Value Shifting, Demergers and Other Measures) Act 2002 applies in relation to the head company of the consolidated group for the current year; andsection 160AFE of the

(d) an entity (the joining entity) became a subsidiary member of a consolidated group at a time (the joining time) during the current year; and

the condition in subsection (2) is satisfied.

if the joining time was the start of the current year or the time the joining entity came into existence—at the joining time; or

otherwise—throughout the period:

beginning at the start of the current year, or the time the joining entity came into existence (whichever is later); and

ending at the joining time.

(a) a consolidated group came into existence during an income year (the current year); and

the current year ended before 1 July 2004; and

(c) Income Tax Assessment Act 1936 as amended by the New Business Tax System (Consolidation, Value Shifting, Demergers and Other Measures) Act 2002 applies in relation to the head company of the consolidated group for the current year; andsection 160AFE of the

(d) an entity (the joining entity) became a subsidiary member of the consolidated group at a time (the joining time) during the current year; and

the condition in subsection (2) is satisfied; and

(f) the joining entity had excess foreign tax credits from the earliest non-membership period (under Income Tax Assessment Act 1997) in the current year.section 701-30 of the

if the joining time was the start of the current year or the time the joining entity came into existence—at the joining time; or

otherwise—throughout the period:

beginning at the start of the current year, or the time the joining entity came into existence (whichever is later); and

ending at the joining time.

(a) subsection 160AFE(4) of that Act provided that the amount of the excess foreign tax credits mentioned in paragraph (1)(f) of this section was the amount of the head company’s excess foreign tax credits from an earlier year of income (the notional year); and

paragraphs 160AFE(3)(a) and (b) of that Act provided that the excess foreign tax credits from the notional year should be applied before the other credits mentioned in those paragraphs.

only apply credits from the most recent 5 years of income ending before the current year;

apply credits from an earlier year of income before applying credits for a later year of income;

do not apply credits beyond the extent of the shortfall mentioned in subsection (1);

do not apply credits to the extent that the credits have already been applied under a previous operation of this section.

income years starting after 30 June 2003; and

(b) non-membership periods (if any) under Income Tax Assessment Act 1997 starting after 30 June 2003.section 701-30 of the

(a) the taxpayer becomes a member of a consolidated group or MEC group on the day (the consolidation day) the group comes into existence; and

the consolidation day either is before 1 July 2003 or is both:

the first day of the first income year starting after 30 June 2003 of the group’s head company (for a consolidated group) or provisional head company (for a MEC group) on the consolidation day; and

before 1 July 2004; and

the taxpayer was not a member of a consolidated group or MEC group before the consolidation day.

income years starting on or after the consolidation day; and

(b) non-membership periods (if any) under Income Tax Assessment Act 1997 starting on or after the consolidation day.section 701-30 of the

has a substituted accounting period; and

is not a member of a consolidated group or a MEC group.

(a) the taxpayer becomes the head company of a consolidated group or MEC group on the day (also the consolidation day) the group comes into existence; and

the consolidation day is on or after 1 July 2002 and before 1 July 2003 and is not the start of an income year (whether or not the taxpayer has a substituted accounting period).

the consolidation day is after 1 July 2002; and

the taxpayer does not have a substituted accounting period;

the taxpayer has a substituted accounting period; and

(b) the taxpayer becomes the head company of a consolidated group or MEC group on the day (also the consolidation day) the group comes into existence; and

the consolidation day is on or after 1 July 2003 and is not the start of the taxpayer’s next income year.

to a taxpayer as mentioned in item 5, 6 or 7; and

for a period that is shorter than an income year.

(a) continuously for a period of at least 12 months ending on the day before the day on which Income Tax Assessment Act 1936 as amended by this Schedule starts to apply to the taxpayer; orsection 160AFE of the

from the time when the income company and the credit company were both in existence, if that period is shorter.

becomes a subsidiary member of a consolidated group or MEC group; and

has a period referred to in section 701-30 as a non-membership period.

continuously for a period of at least 12 months ending on the last day of the non-membership period; or

from the time when the income company and the credit company were both in existence, if that period is shorter.

(a) because of item 5, 6 or 7, old notional income year); andsection 160AFE applies to a taxpayer as if a period were an income year (the

the taxpayer has an initial excess credit (within the meaning of old section 160AFE) in relation to the notional income year; and

(c) the taxpayer transfers all or part (the extent of the transfer being the transfer amount) of that initial excess credit under old section 160AFE for utilisation by another company in the notional income year.

that a specified *exempting debit arises in the *exempting account of the entity, for a specified *distribution or other benefit to a disadvantaged member;

that no *imputation benefit is to arise in respect of a distribution that is made to a favoured member and specified in the determination.

specify the *franking debit under paragraph (3)(a) by specifying the *franking percentage to be used in working out the amount of the debit; and

specify the *exempting debit under paragraph (3)(b) by specifying the *exempting percentage to be used in working out the amount of the debit.

an *exempting credit would arise in the *exempting account of the member as a result of the distribution; or

(e) the member would not be liable to pay *withholding tax on the distribution, because of the operation of paragraph 128B(3)(ga) of the Income Tax Assessment Act 1936.

a *franking credit arises for the first member under item 5, 6 or 7 of the table in section 208-130 (distributions by *exempting entities to exempting entities);

a franking credit or *exempting credit arises for the first member because the distribution is *franked with an exempting credit;

the first member is entitled to a *tax offset because:

the distribution is a *franked distribution made by an exempting entity; or

the distribution is *franked with an exempting credit.

if the specified *distribution has been *franked with an exempting credit—the difference between the amount of the *exempting credit on the distribution and an amount worked out by multiplying the amount of the distribution by the highest *exempting percentage at which a distribution to a favoured member is franked; or

if the specified distribution, although *frankable, has not been franked with an exempting credit—an amount worked out by multiplying the amount of the distribution by the highest exempting percentage at which a distribution to a favoured member is franked; or

if the specified distribution is *unfrankable—an amount worked out by multiplying the amount of the distribution by the highest exempting percentage at which a distribution to a favoured member is franked; or

if the specified benefit is the issue of bonus shares from a share premium account—an amount worked out by multiplying the amount debited to the share premium account in respect of the bonus shares by the highest exempting percentage at which a distribution to a favoured member is franked; or

if some other benefit is specified—an amount worked out by multiplying the value of the benefit by the highest exempting percentage at which a distribution to a favoured member is franked.

in a case where the Commissioner determines that an *exempting debit is to arise in the *exempting account of an entity under paragraph 204-30(3)(b)—to the entity; and

in a case where a favoured member is denied an *imputation benefit under paragraph 204-30(3)(c)—to the favoured member.

look at the membership interests in the entity that involve the holder of the interest in bearing the risks and accruing the opportunities of ownership of the entity; and

ask whether at least 95% of those membership interests, and 95% of any interests in those membership interests, are held by Australian residents or entities that receive distributions as exempt income.

limit the circumstances in which a distribution franked with those credits can give rise to benefits under the imputation system; and

quarantine those credits by moving them into a separate account, called the exempting account, when the entity ceases to be an exempting entity; and

deny a recipient of a distribution franked with a credit from that account any benefit under the imputation system as a result of that distribution, unless the recipient was a member of the entity immediately before it became a former exempting entity.

at that time:

not less than 95% of the *accountable membership interests in the entity; or

not less than 95% of the *accountable partial interests in the entity;

paragraph (a) does not apply but it would nevertheless be reasonable to conclude that, at that time, the risks involved in, and the opportunities resulting from, holding accountable membership interests, or accountable partial interests, in the entity that are not held by, or directly or indirectly for the benefit of, prescribed persons are substantially borne by, or substantially accrue to, prescribed persons.

have regard to any *arrangement in respect of *membership interests (including unissued membership interests), or in respect of *partial interests, in the entity (including any derivatives held or issued in connection with those membership interests or partial interests) of which the entity is aware; but

do not have regard to risks involved in the ownership of membership interests, or partial interests, in the entity that are substantially borne by any person in the person’s capacity as a secured creditor.

the purposes for which the membership interest was issued; and

any special or limited rights connected with, arising from, or attached to:

the membership interest; or

other membership interests in the entity held by the holder of the membership interest; or

membership interests in the entity held by persons other than the holder of the membership interest; or

interests in any of the above;

the extent to which any such special or limited rights are similar to or differ from the rights that are normally attached to the ownership of *ordinary membership interests in *corporate tax entities; and

the relationship between the value of the membership interest and the value of the entity; and

any relationship or connection (whether of a personal or business nature) between holders of membership interests in the entity of which the entity is aware; and

any *arrangement in respect of membership interests (including unissued membership interests) in the entity, or interests in membership interests in the entity, of which the entity is aware;

it is a finance membership interest; or

it is a distribution access membership interest; or

it does not carry the right to receive distributions; or

it was issued, transferred or acquired for a purpose (other than an incidental purpose) of ensuring that the entity is not effectively owned by prescribed persons.

the membership interest is a *non-equity share in the entity; or

having regard to the rights attached to the membership interest and to any *arrangement with respect to the membership interest of which the entity is aware, the membership interest is equivalent to a debt owed by the entity to the holder of the membership interest.

the manner in which the *distributions payable in respect of the membership interest are calculated, and the conditions applying to the payment of such distributions, indicate that the distributions paid are equivalent to the receipt by the person to whom they are paid of interest or an amount in the nature of or similar to interest; or

the capital invested by the holder of the membership interest will be redeemed or, because of an *arrangement between the holder and the entity or an *associate of the entity, it is reasonable for the holder to expect that the capital will be redeemed, for an amount that is not less than, or for property (including other membership interests in the entity) the value of which is not less than, the amount paid for the membership interest; or

the membership interest is redeemable by the entity by payment of a lump sum or by the transfer of property, or the membership interest has a preferred right to a repayment of capital on a winding up, where the amount of the lump sum or the value of the property, or the amount of the capital to be repaid, as the case may be, is to be calculated by reference to an implicit interest rate.

the terms of the issue of the membership interest, including any guarantee of payment of distributions; and

the amounts of the *distributions paid on the membership interest relative to the issue price of the membership interest; and

whether there is any guaranteed rate at which *franked distributions are to be paid on the membership interest; and

the duration of the period within which the membership interest was issued; and

the rights attached to other membership interests in the entity; and

any other relevant matters;

the purposes for which the interest was granted; and

the nature of the interest; and

any special or limited rights connected with or arising from:

the interest; or

other *membership interests, or partial interests, in the entity held by the holder of the interest; or

membership interests, or partial interests, in the entity held by persons other than the holder of the interest;

the extent to which the interest is similar to or differs from beneficial ownership; and

the relationship between the value of the interest and the value of the entity; and

any relationship or connection (whether of a personal or business nature) between holders of partial interests in the entity, and the holders of membership interests in the entity, of which the entity is aware; and

any *arrangement in respect of membership interests (including unissued membership interests) in the entity, or partial interests in the entity, of which the entity is aware;

the company is not an *Australian resident; or

were the company to receive a *distribution made by the other corporate tax entity, the distribution would be *exempt income of the company.

all the beneficiaries in the trust are prescribed persons under other provisions of this section; or

were the trustee to receive a *distribution made by the corporate tax entity, the distribution would be *exempt income of the trust estate.

all the partners are prescribed persons under other provisions of this section; or

were the partnership to receive a *distribution made by the corporate tax entity, the distribution would be *exempt income of the partnership.

he or she is not an *Australian resident; or

were he or she to receive a *distribution made by the corporate tax entity, the distribution would be *exempt income of the individual.

(a) is a *company, a trustee, or a *partnership, that holds *membership interests (whether *accountable membership interests or excluded membership interests), or *partial interests (whether *accountable partial interests or excluded partial interests), in a *corporate tax entity (the relevant entity); and

is not a prescribed person under section 208-40.

unless subsection (7) applies, the trust is controlled by one or more persons who are prescribed persons; or

all the beneficiaries who are presently entitled to, or during the relevant year of income become presently entitled to, income from the trust are prescribed persons.

the person has the power, either directly, or indirectly through one or more interposed entities, to control the application of the income, or the distribution of the property, of the trust; or

the person has the power, either directly, or indirectly through one or more entities, to appoint or remove the trustee of the trust; or

the person has the power, either directly, or indirectly through one or more entities, to appoint or remove beneficiaries of the trust; or

the trustee of the trust is accustomed or under an obligation, whether formal or informal, to act according to the directions, instructions or wishes of the person or of an *associate of the person.

the entity is a *former exempting entity when the distribution is made; and

the entity is a *franking entity that satisfies the *residency requirement when the distribution is made; and

(c) the distribution is a *frankable distribution; and

the entity allocates an *exempting credit to the distribution.

that distribution is taken not to have been franked with an exempting credit; and

each other *frankable distribution made by the entity within the relevant *franking period is taken not to have been franked with an exempting credit.

both entities are members of the same effectively wholly-owned group; or

the recipient holds more than 5% of the *membership interests in the entity making the distribution (other than finance membership interests or distribution access membership interests within the meaning of section 208-30 or membership interests that do not carry the right to receive distributions) and it would be reasonable to conclude that the risks involved in, and the opportunities resulting from, holding those membership interests are substantially borne by, or substantially accrue to, the recipient.

have regard to any *arrangement in respect of the *membership interests (including unissued membership interests) in the entity making the distribution (including derivatives held or issued in connection with those membership interests); and

do not have regard to risks involved in the ownership of membership interests in the entity making the distribution that are substantially borne by any person in the person’s capacity as a secured creditor.

throughout that day, not less than 95% of the *accountable membership interests in each of the entities, and not less than 95% of the *accountable partial interests in each of the entities, are held by, or are held indirectly for the benefit of, the same persons; or

paragraph (a) does not apply but it would nevertheless be reasonable to conclude, having regard to the matters mentioned in subsection (2), that, throughout that day, the risks involved in, and the opportunities resulting from, holding accountable membership interests, or accountable partial interests, in each of the entities are substantially borne by, or substantially accrue to, the same persons.

any special or limited rights attaching to *accountable membership interests, or *accountable partial interests, in each of the entities held by persons other than the persons mentioned in paragraph (1)(b) or their *associates; and

any special rights attaching only to accountable membership interests, or accountable partial interests, in each of the entities held by the persons mentioned in paragraph (1)(b) or their associates; and

the respective proportions:

that accountable membership interests in each of the entities held by the persons mentioned in paragraph (1)(b) or their associates, and other accountable membership interests in the entity concerned, bear to all the accountable membership interests in that entity; and

that accountable partial interests in each of the entities held by the persons mentioned in paragraph (1)(b) or their associates, and other accountable partial interests in the entity concerned, bear to all the accountable partial interests in that entity; and

the respective proportions that:

the total value of accountable membership interests in each of the entities held by the persons mentioned in paragraph (1)(b) or their associates, and the total value of other accountable membership interests in the entity concerned, bear to the total value of all the accountable membership interests in that entity; and

the total value of accountable partial interests in each of the entities held by the persons mentioned in paragraph (1)(b) or their associates, and the total value of other accountable partial interests in the entity concerned, bear to the total value of all the accountable partial interests in that entity; and

the purposes for which accountable membership interests, or accountable partial interests, in each of the entities were issued or granted to persons other than the persons mentioned in paragraph (1)(b) or their associates; and

any *arrangement in respect of accountable membership interests, or accountable partial interests, in each of the entities held by persons other than the persons mentioned in paragraph (1)(b) or their associates (including any derivatives held or issued in connection with those membership interests or interests) of which the entity concerned is aware.

where the entity is a *company:

(i) if the voting shares (as defined in the Corporations Act 2001) in the relevant former exempting entity are not divided into classes—those voting shares; or

if the voting shares (as so defined) in the relevant former exempting entity are divided into 2 or more classes—the shares in one of those classes; and

where the entity is a *corporate unit trust or *public trading trust—the units in the trust; and

where the entity is a *corporate limited partnership—the income of the partnership.

a person who is not an *Australian resident;

a *life insurance company;

an exempting entity;

a *former exempting entity;

a trustee of a trust in which an interest was held by a person referred to in any of paragraphs (a) to (d);

a *partnership in which an interest was held by a person referred to in any of paragraphs (a) to (d).

if the *member was a person referred to in any of paragraphs (3)(a) to (d)—the member; or

if the member was a trustee of a trust or a *partnership, being a trust or partnership in which a person referred to in any of those paragraphs held an interest—the holder of the interest;

the relevant former exempting entity was an *exempting entity at the time it made the *distribution; and

the distribution was a *franked distribution made to the member; and

if the *member was a *former exempting entity—the member was an exempting entity; and

if the member was a trustee of a trust or *partnership in which a former exempting entity had an interest—the former exempting entity was an exempting entity.

the person is a beneficiary under the trust; or

the person derives, or will derive, income indirectly, through interposed trusts or *partnerships, from *distributions received by the trustee.

the person is a partner in the partnership; or

the person derives, or will derive, income indirectly, through interposed trusts or partnerships, from *distributions received by the partnership.

the Commissioner has made a determination under paragraph 204-30(3)(c) that no *imputation benefit is to arise for the entity in respect of the distribution; or

(b) the Commissioner has made a determination under paragraph 177EA(5)(b) of the Income Tax Assessment Act 1936 that no franking credit benefit (within the meaning of that section) is to arise in respect of the distribution to the entity; or

the distribution is part of a *dividend stripping operation.

the amount of an *exempting credit arising under item 2 of the table in section 208-115 because a *former exempting entity receives a *distribution *franked with an exempting credit; or

the amount of a *franking credit arising under item 2 or 5 of the table in section 208-130 because an *exempting entity receives a distribution franked with an exempting credit;

the amount of an *exempting credit arising under item 3 of the table in section 208-115 because a *former exempting entity receives a *distribution *franked with an exempting credit; or

the amount of a *franking credit arising under item 3 or 6 of the table in section 208-130 because an *exempting entity receives a distribution franked with an exempting credit;

(a) at a particular time, a *corporate tax entity is an *exempting entity; and

at that time all of the *membership interests in the entity are owned by the Commonwealth; and

the Commonwealth has offered for sale or sold, or proposes to offer for sale, some or all of the membership interests; and

the Minister is satisfied, having regard to the matters mentioned in subsection (2), that it is desirable to make a determination or determinations under this section in relation to the entity.

whether the making of the determination or determinations is necessary to enable the entity to make *distributions *franked at a *franking percentage of 100% after the sale; and

the extent to which the success of the sale or proposed sale depended or will depend upon the ability of the entity to make *franked distributions; and

the extent to which the reduction in receipts of income tax resulting from the making of the determination or determinations would be offset by the receipt of increased proceeds from the sale; and

any other matters that the Minister thinks relevant.

an *exempting debit of the entity (not exceeding the exempting surplus) specified in the determination is taken to have arisen immediately before the end of that income year; and

a *franking credit of the entity equal to the amount of the exempting debit is taken to have arisen immediately before the end of that income year.

the distribution is made to a person who is an employee of the exempting entity, or of a *company that is a *subsidiary of the exempting entity, at the time the distribution is made; and

the recipient acquired the *share on which the distribution is made under an *employee share scheme in circumstances specified as relevant in section 208-215; and

the recipient does not hold that share as a trustee.

the share is acquired by the person in respect of, or for or in relation directly or indirectly to, any employment of the person by the entity or by an entity that is a *subsidiary of the company; and

all the shares available for acquisition under the scheme are ordinary shares or are preference shares to which are attached substantially the same rights as are attached to ordinary shares; and

immediately after the acquisition of the shares:

the person does not hold a legal or beneficial interest in more than 5% of the shares in the company; and

the person is not in a position to control, or control the casting of, more than 5% of the maximum number of votes that might be cast at a general meeting of the company; and

the share is not a *non-equity share.

the recipient of the distribution is a former exempting entity and the distribution gives rise to an *exempting credit for the recipient; or

the recipient of the distribution is an *exempting entity and the distribution gives rise to a *franking credit for the recipient; or

the distribution *flows indirectly to a former exempting entity and gives rise to an exempting credit for that entity; or

the distribution flows indirectly to an exempting entity and gives rise to a franking credit for that entity.

the distribution is made to a person who is an employee of the former exempting entity, or of a *company that is a *subsidiary of the former exempting entity, at the time the distribution is made; and

the recipient acquired the *share on which the distribution is made under an *employee share scheme in circumstances specified as relevant in section 208-215; and

the recipient does not hold that share as a trustee.

a *corporate tax entity other than a former exempting entity became an *exempting entity; and

immediately before the entity became an exempting entity all the accountable membership interests and accountable partial interests were beneficially owned (whether directly or indirectly) by natural persons who were *Australian residents; and

the entity became an exempting entity because some or all of the persons mentioned in paragraph (b) ceased to be Australian residents; and

the entity becomes a former exempting entity because all of the persons mentioned in paragraph (b) are or have become Australian residents; and

an amount attributable to a distribution *franked with an exempting credit made by the entity is included in the assessable income of such a person; and

all the accountable membership interests or accountable partial interests in the entity were, throughout the period beginning when the entity became an exempting entity and ending when the amount was received by the person, beneficially owned (directly or indirectly) by the person mentioned in paragraph (b); and

the person is an eligible continuing substantial member in relation to the distribution.

in the case of a membership interest in a *company—it is an ordinary share; and

in the case of a membership interest in a *corporate limited partnership—it is an interest in the income of the partnership; and

in the case of a membership interest in a *corporate unit trust or *public trading trust—it is a unit in the trust.

section 205-40 sets out when a *franking account is in deficit; and

section 208-125 sets out when an *exempting account is in deficit.

for an entity making a *distribution—has the meaning given by section 202-20; and

for an income year in which, or in relation to which, an event specified in a table in one of the following sections occurs:

section 205-15 (general table of *franking credits);

section 205-30 (general table of *franking debits);

section 208-115 (table of *exempting credits);

section 208-120 (table of *exempting debits);

section 208-130 (table of franking credits that arise because of an entity’s status as a *former exempting entity or *exempting entity);

section 208-145 (table of franking debits that arise because of an entity’s status as a former exempting entity or exempting entity); and

for an entity receiving a distribution—has the meaning given by section 207-75; and

of a *franking credit—has the meaning given by section 207-55; and

of an *exempting credit—has the meaning given by section 208-180.

section 205-40 sets out when a *franking account is in surplus; and

section 208-125 sets out when an *exempting account is in surplus.

unrealised losses and gains on the excluded assets will not be taken into account in calculating the company’s unrealised net loss; and

losses on the excluded assets will be allowed without the company being subject to the same business test.

a *CGT asset that the company owned at the relevant time was also *trading stock or a *revenue asset at that time; and

(b) the asset’s *cost base at the relevant time is less than the amount that would be compared under section 165-115F with the asset’s market value in working out a notional revenue gain or notional revenue loss that the company has at the relevant time in respect of the asset;

the day on which the company lodges its income tax return for the income year in which the relevant time occurred; or

such later day as the Commissioner allows.

an alteration takes place in the ownership or control of the company; or

the liquidator of the company declares that shares in the company are worthless (CGT event G3).

has a direct or indirect equity interest of at least 10% in the company; or

is owed a debt of at least $10,000 by the company or by another entity that has a significant equity or debt interest in the company.

a *CGT asset that the company owned at the relevant alteration time was also *trading stock or a *revenue asset at that time; and

(b) the asset’s *cost base at the relevant alteration time is less than the amount that, if the relevant alteration time were a changeover time, would be compared under section 165-115F with the asset’s market value in working out a notional revenue gain or notional revenue loss that the company would have at the changeover time in respect of the asset;

the day on which the company lodges its income tax return for the income year in which the relevant alteration time occurred; or

such later day as the Commissioner allows.

would be *realised for income tax purposes by a *realisation event that happens to the equity or debt; or

would be so realised but for Subdivision 170-D (which defers realisation of capital losses and deductions);

that happened for the company before the realisation event; and

immediately before which the equity or debt was, or was part of:

if the company was a *loss company at that alteration time—a relevant equity interest, or a relevant debt interest, that an entity had in the company; or

otherwise—what would have been such an interest if the company had been a loss company at that alteration time.

the company had an adjusted unrealised loss at that time worked out under this section; and

the company were therefore a *loss company at that time; and

that adjusted unrealised loss were the company’s overall loss at that time.

a notional capital loss, or a notional revenue loss, that the company has at that last alteration time in respect of a *CGT asset;

a trading stock decrease in relation to that time for a CGT asset that was *trading stock of the company at that time.

(a) it is reasonable to conclude that the thing was not attributable to value that is reflected in a notional capital gain or notional revenue gain that the company has at that last alteration time in respect of a *CGT asset; or

the thing has resulted in a reduction of the *reduced cost base of the equity or debt.

the time of the *realisation event referred to in paragraph (1)(a); or

the time immediately before the earliest time when the equity or debt is no longer, or is no longer part of:

if the company was a *loss company at that last alteration time—a relevant equity interest, or a relevant debt interest, that an entity has in the company; or

otherwise—what would have been such an interest if the company had been a loss company at that last alteration time.

under subsection 116-20(1) only; and

disregarding subsection 103-10(1) and paragraph 103-10(2)(a) (about entitlement to receive money or property).

a notice need not be given under section 165-115ZC because of this section; and

this section does not affect the requirements that apply to a notice that otherwise must be given under that section.

that time is before that day; and

subsection 165-115E(4) of that Act would otherwise require the choice to be made before the end of those 6 months.

that time is before that day; and

subsection 165-115U(1D) of that Act would otherwise require the choice to be made before the end of those 6 months.

(a) must vary the notice referred to in subsection (2) in such a way (which may include setting out additional information) that the notice as varied complies with Income Tax Assessment Act 1997 as affected by the amendments; andsection 165-115ZC of the

must be given within the 6 months referred to in subsection (1) of this section, or within a further period allowed by the Commissioner; and

must otherwise be given in accordance with that section.

would be realised for income tax purposes by a realisation event that happens to the equity or debt; or

would be so realised but for Subdivision 170-D of that Act (which defers realisation of capital losses and deductions);

that happened for the company, before the realisation event; and

immediately before which the equity or debt was, or was part of:

if the company was a loss company at that alteration time—a relevant equity interest, or a relevant debt interest, that an entity had in the company; or

otherwise—what would have been such an interest if the company had been a loss company at that alteration time;

(e) that last alteration time is before the day on which the New Business Tax System (Consolidation, Value Shifting, Demergers and Other Measures) Act 2002 received the Royal Assent; and

(f) the entity that owns the equity or debt immediately before the realisation event chooses to apply this section to the equity or debt, in relation to that last alteration time, instead of Income Tax Assessment Act 1997; andsection 165-115ZD of the

the choice is made on or before the latest of these:

the last day of the period of 6 months after the day referred to in paragraph (c) of this subsection;

the day on which the entity lodges its income tax return for the income year in which the realisation event occurred;

such later day as the Commissioner allows.

(a) the company had an adjusted unrealised loss at that time equal to the loss referred to in paragraph (1)(a) of this section, except so much of the loss as it is reasonable to conclude is attributable to none of these:

a notional capital loss, or a notional revenue loss, that the company has at that last alteration time in respect of a CGT asset;

a trading stock decrease in relation to that time for a CGT asset that was trading stock of the company at that time; and

the company were therefore a *loss company at that time; and

that adjusted unrealised loss were the company’s overall loss at that time.

(a) a notice need not be given under Income Tax Assessment Act 1997 because of this section; andsection 165-115ZC of the

this section does not affect the requirements that apply to a notice that otherwise must be given under that section.

of working out whether a company has an unrealised net loss at a particular time, has the meaning given by section 165-115E; and

of working out whether a company has an adjusted unrealised loss at a particular time, has the meaning given by section 165-115U.

of working out whether a company has an unrealised net loss at a particular time, has the meaning given by section 165-115E; and

of working out whether a company has an adjusted unrealised loss at a particular time, has the meaning given by section 165-115U.

value has been shifted out of the asset by the owner creating in an associate a right over the asset; and

the value shifted was not brought to tax when the right was created and has not since been brought to tax on a realisation of the right.

(a) the event happens to a *CGT asset (the underlying asset) you own that, at the time of the event (the realisation time):

(i) is not a *depreciating asset; or

is an item of your *trading stock; or

is a *revenue asset of yours; and

before the realisation time:

you created in an *associate of yours; or

an entity covered by subsection (2) (about previous owners of the underlying asset) created in an associate of the entity;

immediately before the realisation time, the right is still in existence and is owned by an associate of yours; and

a decrease in the underlying asset’s market value is reasonably attributable to the creating of the right; and

creating the right involved a *CGT event:

(i) whose *capital proceeds are less than the market value of the right when created (the difference between those capital proceeds and that market value is called the shortfall on creating the right); and

(ii) that is not a CGT event that happens to some part of the underlying asset but not to the remainder of it; and

the shortfall on creating the right is more than $50,000; and

(g) the market value of the underlying asset at the realisation time is less than it would have been if the right no longer existed at that time (the difference is called the deficit on realisation).

the entity *acquired the underlying asset before you did; and

there has been a roll-over for each *CGT event (if any) as a result of which an entity (including you) acquired the asset after the first entity acquired it, and before the realisation time; and

for each such CGT event (if any), the entity (including you) that acquired the underlying asset as a result of the event was, immediately after the event, an *associate of the entity that last acquired the asset before the event.

the shortfall on creating the right; and

the deficit on realisation.

is *realised for income tax purposes by a *realisation event that happens to the right:

before or at the realisation time for the underlying asset; and

at a time when the right is owned by an entity that is your *associate immediately before the realisation time for the underlying asset; and

is not disregarded.

is *realised for income tax purposes by a *realisation event that happens to the right:

within 4 years after the realisation time for the underlying asset; and

at a time when the right is owned by an entity that is your *associate immediately before the realisation time for the underlying asset; and

is not disregarded;

(a) the event happens to a *CGT asset (the underlying asset) you own that, at the time of the event (the realisation time):

(i) is not a *depreciating asset; or

is an item of your *trading stock;

is a *revenue asset of yours; and

at the realisation time, you create in an *associate of yours a right in respect of the underlying asset; and

creating the right involves a *CGT event:

(i) whose *capital proceeds are less than the market value of the right when created (the difference between those capital proceeds and that market value is called the shortfall on creating the right); and

(ii) that is not a CGT event that happens to some part of the underlying asset but not to the remainder of it; and

the shortfall on creating the right is more than $50,000; and

(e) the market value of the underlying asset at the realisation time is less than it would have been if the right had not been created (the difference is called the deficit on realisation).

the shortfall on creating the right; and

the deficit on realisation.

is *realised for income tax purposes by a *realisation event that happens to the right:

within 4 years after the realisation time for the underlying asset; and

at a time when the right is owned by an entity that is your *associate immediately before the realisation time for the underlying asset; and

is not disregarded;

the underlying asset is land; and

the right referred to in paragraph 723-10(1)(b) or 723-15(1)(b) is a *conservation covenant over the land.

a will or codicil; or

an order of a court varying or modifying a will or codicil; or

a total or partial intestacy; or

an order of a court varying or modifying the application of the law about distributing the estate of someone who dies intestate.

(a) a *realisation event happens to some part of a *CGT asset (the underlying asset) you own that, at the time of the event:

(i) is not a *depreciating asset; or

is an item of your *trading stock; or

is a *revenue asset of yours;

(b) a realisation event consists of creating an interest in a CGT asset (also the underlying asset) you own that, at the time of the event, is covered by subparagraph (a)(i), (ii) or (iii).

the *realisation event happens to the underlying asset; and

the shortfall on creating the right referred to in paragraph 723-10(1)(e) or 723-15(1)(c); and

the deficit on realisation referred to in paragraph 723-10(1)(g) or 723-15(1)(e);

apply to that thing, in relation to each of the rights mentioned in subsection (1) of this section, as if paragraphs 723-10(1)(f) and 723-15(1)(d) were omitted; and

are taken always to have so applied.

if the right is also trading stock—worked out under section 977-35 or 977-40 (about realisation events for trading stock); or

if the right is also a revenue asset—the greater of:

the gain worked out under section 977-15 (about realisation events for CGT assets); and

the gain worked out under section 977-55 (about realisation events for revenue assets).

apart from this Division, a loss would be *realised for income tax purposes by the CGT event; and

(b) apart from this Division, a loss would have been *realised for income tax purposes by a realisation event if the event had happened, just before the CGT event, to a *CGT asset (the underlying asset) that the company or trust then owned and that:

(i) was not then a *depreciating asset; or

was then an item of *trading stock of the company or trust; or

was then a *revenue asset of the company or trust; and

(c) the loss referred to in paragraph (b) would have been reduced under Subdivision 723-A by an amount (the underlying asset loss reduction); and

(d) for the entity (the transferor) that owned the interest just before the CGT event, the interest was a *direct roll-over replacement or *indirect roll-over replacement for the underlying asset.

the interest was an *indirect roll-over replacement; or

the amount worked out under subsection (2) does not appropriately reflect the matters referred to in this subsection;

the underlying asset loss reduction; and

the quantum of the interest relative to all *direct roll-over replacements and indirect roll-over replacements that the transferor owns or has previously owned.

a *CGT event happened to the underlying asset while the transferor owned it; and

the other entity *acquired the underlying asset as a result of that CGT event; and

there was a *replacement-asset roll-over for the CGT event; and

the transferor received the CGT asset (or CGT assets including it) in respect of the CGT event as the replacement asset (or the replacement assets).

a *CGT event happened to another CGT asset at a time when the transferor owned it and the other entity already owned the underlying asset; and

for the transferor, the other CGT asset was at that time:

a *direct roll-over replacement for the underlying asset; or

an indirect roll-over replacement for the underlying asset because of any other application or applications of this subsection; and

there was a *replacement-asset roll-over for the CGT event; and

the transferor received the first CGT asset (or CGT assets including it) in respect of the CGT event as the replacement asset (or the replacement assets).

adjusts the value of those interests for income tax purposes to take account of material changes in market value that are attributable to the value shift; and

treats the value shift as a partial realisation to the extent that value is shifted between interests held by different owners, and in some other cases.

to prevent inappropriate losses from arising on the realisation of *equity or loan interests from which value has been shifted to other equity or loan interests in the same entity; and

to prevent inappropriate gains from arising on the realisation of equity or loan interests in the same entity to which the value has been shifted;

adjusting the value of those interests for income tax purposes to take account of changes in market value that are attributable to the value shift; and

treating the value shift as a partial realisation to the extent that value is shifted:

between interests held by different owners; or

in the case of interests in their character as CGT assets—from post-CGT assets to pre-CGT assets; or

between interests of different characters.

the target entity is a company or trust at some time during the *scheme period; and

section 725-55 (Controlling entity test) is satisfied; and

section 725-65 (Cause of the value shift) is satisfied; and

you are an *affected owner of a *down interest, or an *affected owner of an *up interest, or both; and

neither of sections 725-90 and 725-95 (about direct value shifts that are reversed) applies.

the target entity;

the controller;

an entity that was an *associate of the controller at some time during or after the *scheme period;

an *active participant in the *scheme;

to which the decrease in the market value of the *down interests is reasonably attributable; and

to which the increase in the market value of the *up interests, or the issue of up interests at a *discount, is reasonably attributable, or that is or include the issue of up interests at a *discount.

at some time during the *scheme period, the target entity has fewer than 300 members (in the case of a company) or fewer than 300 beneficiaries (in the case of a trust); and

the first entity has actively participated in, or directly facilitated, the entering into or carrying out of the *scheme (whether or not it did so at the direction of some other entity); and

the first entity:

owns a *down interest at the *decrease time; or

owns an *up interest at the *increase time or has an up interest issued to it at a *discount because of the *direct value shift.

the entity is the controller;

the entity was an *associate of the controller at some time during or after the *scheme period;

the entity is an *active participant in the *scheme.

there is at least one *affected owner of *down interests; and

the entity owns the up interest at the *increase time, or the interest is an up interest because it was issued to the entity at a *discount;

the entity is the controller;

the entity was an *associate of the controller at some time during or after the *scheme period;

at some time during or after the scheme period, the entity was an associate of an entity that is an affected owner of down interests because it was an associate of the controller at some time during or after that period;

the entity is an *active participant in the *scheme.

the one or more things referred to in paragraph 725-145(1)(b) brought about a state of affairs, but for which the direct value shift would not have happened; and

as at the time referred to in that paragraph, it is more likely than not that, because of the *scheme, that state of affairs will cease to exist within 4 years after that time.

at the end of those 4 years; or

when a *realisation event happens to *down interests or *up interests of which you are, or any other entity is, an *affected owner;

section 725-90 applies, and the state of affairs referred to in paragraph 725-90(1)(a) ceases to exist; and

the direct value shift would not have happened but for that state of affairs ceasing to exist.

there is a decrease in the market value of one or more equity or loan interests in the target entity; and

the decrease is reasonably attributable to one or more things done under the scheme, and occurs at or after the time when that thing, or the first of those things, is done; and

either or both of subsections (2) and (3) are satisfied.

a *primary equity interest is issued as mentioned in subsection 130-20(1) (about bonus equities issued in relation to original equities); and

(b) subsection 130-20(3) does not apply (about bonus equities that are a dividend or otherwise assessable income);

(a) a *primary equity interest is issued as mentioned in subsection 6BA(1) of the Income Tax Assessment Act 1936 (about bonus shares issued in relation to original shares); and

subsection 6BA(2) of that Act applies (about bonus shares that are a dividend);

(a) a corporate unit trust Income Tax Assessment Act 1936; orwithin the meaning of section 102J of the

a public trading trust within the meaning of section 102R of that Act.

the decreases in market value of the down interests; and

the issue at a *discount of the up interests covered by subsection 725-145(2); and

the increases in market value of the up interests covered by subsection 725-145(3).

the total increase in market value of your *up interests; and

(b) the total *discounts given to you on the issue of your up interests.

consisted only of:

the decreases in market value of your *down interests; and

the issue at a *discount of your *up interests covered by subsection 725-145(2); and

the increases in market value of your up interests covered by subsection 725-145(3); and

were from each of your down interests to each of your up interests.

subsection 130-20(3) applies (because none of them is a dividend or otherwise assessable income); and

item 1 of the table in that subsection applies (because the original interests are post-CGT assets);

the respective *cost bases and *reduced cost bases of those original interests are not reduced;

the bonus interests referred to in subsection (1) do not give rise to a *taxing event generating a gain for you under the table in section 725-245 on any of those original interests.

item 1 of the table in that subsection applies (because the original interests are post-CGT assets); or

item 2 of that table applies (because the original interests are pre-CGT assets and an amount has been paid for the bonus interests that you were required to pay);

the respective *adjustable values of those original interests, in their character as *trading stock or *revenue assets, are not reduced; and

the bonus interests referred to in subsection (1) do not give rise to a *taxing event generating a gain for you under the table in section 725-335 on any of those original interests.

a decrease in the market value of a *down interest of which you are an *affected owner is reasonably attributable to the target entity proposing to buy back that interest for less than its market value; and

the target entity does buy back that down interest; and

(c) subsection 159GZZZQ(2) of the Income Tax Assessment Act 1936 treats you as having received the down interest’s market value worked out as if the buy-back had not occurred and was never proposed to occur.

item 8 of the table in subsection 725-250(2); and

item 9 of the table in subsection 725-335(3);

there are one or more *taxing events generating a gain for *down interests of which you are an affected owner (see subsection (2));

the *cost base and *reduced cost base of down interests of which you are an *affected owner are reduced (see subsection (3));

the cost base and reduced cost base of *up interests of which you are an affected owner are uplifted (see subsection (4)).

whether under the table in section 725-245 there is a *taxing event generating a gain for you on a *down interest; and

if so, the amount of the gain;

whether the *cost base or *reduced cost base of the interest is reduced or uplifted; and

if so, by how much;

(c) the adjustable value from time to time of that or any other *equity or loan interest in the *target entity is its cost base or reduced cost base, as appropriate; and

(d) if the interest is an *up interest because it was issued at a *discount—the adjustable value of the interest immediately before it was issued was its cost base or reduced cost base, as appropriate, when it was issued.

the *adjustable value of each of those down interests is decreased by the amount worked out under the section (if any) specified for the down interests in the last column of that item; and

the adjustable value of each of those *up interests is uplifted by the amount worked out under the section (if any) specified for the up interests in that column.

each taxing event generating a gain for that interest under any other item in that table; and

each decrease in the *cost base or *reduced cost base of the interest under an item in the table in subsection 725-250(2).

the *adjustable values of *down interests of which you are an *affected owner are reduced (see subsection (2));

the adjustable values of *up interests of which you are an affected owner are uplifted (see subsection (3));

there are one or more *taxing events generating a gain for down interests of which you are an affected owner (see subsection (5)).

*immediately before the *decrease time, you had sold the interest to someone else (at *arm’s length and in the ordinary course of business) for its *adjustable value immediately before the decrease time; and

immediately after the decrease time, you had bought the interest back for the reduced adjustable value.

*immediately before the *increase time, you had sold the interest to someone else (at *arm’s length and in the ordinary course of business) for its *adjustable value immediately before the increase time; and

immediately after the increase time, you had bought the interest back for the uplifted adjustable value.

if the interest has been *trading stock of yours ever since the start of the income year in which that time occurs—its *value as trading stock at the start of the income year; or

otherwise—its cost.

the *adjustable values of *down interests of which you are an *affected owner are reduced (see subsection (2));

the adjustable values of *up interests of which you are an affected owner are uplifted (see subsection (3));

one or more *taxing events generating a gain for down interests of which you are an affected owner (see subsection (5)).

*immediately before the *decrease time, you had sold the interest to someone else for its *adjustable value immediately before the decrease time; and

immediately afterwards, you had bought the interest back for the reduced adjustable value; and

from the time when you bought it back, the interest continued to be a revenue asset, for the same reasons as it was a revenue asset before you sold it.

*immediately before the *increase time, you had sold the interest to someone else for its *adjustable value immediately before the increase time; and

immediately afterwards, you had bought the interest back for the uplifted adjustable value; and

from the time when you bought it back, the interest continued to be a revenue asset, for the same reasons as it was a revenue asset before you sold it.

the *adjustable value of each of those down interests is decreased by the amount worked out under the section (if any) specified for the down interests in the last column of that item; and

the adjustable value of each of those *up interests is uplifted by the amount worked out under the section (if any) specified for the up interests in that column.

of which you are an *affected owner; and

that are specified in item 2, 4 or 7 in the table in subsection (3);

each taxing event generating a gain for that interest under any other item in the table; and

each decrease in the *adjustable value of the interest under that or any other item in the table.

to work out the amount of the gain for a *taxing event generating a gain under:

section 725-245; or

item 2, 4 or 7 of the table in subsection 725-335(3); and

to work out the decrease in *adjustable value of a *down interest under:

item 1, 2, 3, 4 or 6 of the table in subsection 725-250(2); or

item 1, 2, 4 or 7 of the table in subsection 725-335(3).

are of the kind referred to in the relevant item; and

immediately before the *decrease time, had the same *adjustable value as the down interest; and

immediately before that time had the same market value as the down interest; and

sustained the same decrease in market value as the down interest because of the *direct value shift.

item 1 or 2 of the table in subsection 725-250(2); or

item 1 of the table in subsection 725-335(3).

immediately before the *increase time, had the same *adjustable value as the up interest; and

sustained the same increase in market value as the up interest because of the *direct value shift.

immediately before the *increase time, had the same *adjustable value as the up interest; and

because of the direct value shift, are issued at the same discount as the up interest.

item 3, 4, 5 or 8 of the table in subsection 725-250(2); or

item 2, 3, 6 or 9 of the table in subsection 725-335(3).

the sum of the increases in market value of all *up interests in the group because of the *direct value shift; or

the sum of the *discounts at which all *up interests in the group were issued because of the *direct value shift.

if the sum of the decreases in market value of all *down interests because of the *direct value shift is equal to or greater than the sum of the increases in market value of all *up interests and all *discounts given because of the shift—the sum of the decreases; or

if the sum of the decreases in market value of all down interests because of the direct value shift is less than the sum of the increases in market value of all up interests and all discounts given because of the shift—the sum of the increases and discounts.

item 5 or 7 of the table in subsection 725-250(2); or

item 3, 5 or 8 of the table in subsection 725-335(3).

immediately before the *decrease time, had the same *adjustable value as the down interest; and

immediately before that time had the same market value as the down interest; and

sustained the same decrease in market value as the down interest because of the *direct value shift.

prevents losses from arising, because of the value shift, on realisation of direct or indirect equity or loan interests in the losing entity; and

within limits, prevents gains from arising, because of the value shift, on realisation of direct or indirect equity or loan interests in the gaining entity.

exclusions for minor indirect value shifts; and

a series of rules designed to provide safe harbour treatment for common transactions relating to services; and

anti-overlap provisions to prevent double-counting.

entities in the Simplified Tax System; and

entities that meet the CGT small business net asset threshold ($5 million);

to prevent inappropriate losses from arising on the realisation of direct or indirect equity or loan interests in an entity from which there has been a net shift of value because of a non-arm’s length dealing; and

to prevent inappropriate gains from arising on the realisation of direct or indirect equity interests in the entity to which that value has been shifted;

the *losing entity is at the time of the indirect value shift a company or trust (except one listed in section 727-125 (about superannuation entities)); and

in relation to either or both of the following:

the losing entity *providing one or more economic benefits to the gaining entity *in connection with the *scheme from which the indirect value shift results;

the gaining entity providing one or more economic benefits to the losing entity in connection with the scheme;

either or both of sections 727-105 and 727-110 are satisfied; and

no exclusion in Subdivision 727-C applies.

the *losing entity and the *gaining entity have the same *ultimate controller; or

the ultimate controller of the losing entity is the same entity that was the ultimate controller of the gaining entity at a different time during that period; or

the gaining entity is the ultimate controller of the losing entity; or

the losing entity is the ultimate controller of the gaining entity.

at some time during the *IVS period, neither the *losing entity nor the *gaining entity has 300 or more members (in the case of a company) or 300 or more beneficiaries (in the case of a trust); and

the losing entity and the gaining entity have a *common-ownership nexus within the IVS period.

a *complying superannuation fund; or

a *non-complying superannuation fund; or

a *complying approved deposit fund; or

a *non-complying approved deposit fund; or

a *pooled superannuation trust.

all the economic benefits that have been, are being, or are to be, *provided *in connection with the scheme can be identified; and

for each of those economic benefits:

the entity that has provided, is providing, or is to provide, the economic benefit can be identified; and

the entity to which the economic benefit has been, is being, or is to be, provided can be identified; and

if the economic benefit is to be provided—those entities are in existence, and the providing of the economic benefit is not contingent; and

there are no other economic benefits that are to be provided in connection with the scheme if some contingency is met.

(a) the total market value of the one or more economic benefits (lesser benefits) that the gaining entity has provided, is providing, or is to provide, to the losing entity in connection with the scheme; or

if there are no economic benefits covered by paragraph (a)—nil.

the economic benefit can be identified; and

paragraph (2)(b) is satisfied for that benefit.

the first entity pays an amount to the other entity (in this case the market value of the benefit is the amount of the payment);

the first entity provides an asset or services to the other entity;

the first entity does something that creates an asset in the hands of the other entity (for example, a company issues shares to its members);

the first entity incurs a liability to the other entity, or increases a liability it already owes to the other entity;

the first entity terminates all or part of a liability owed by the other entity;

the first entity does something that increases the market value of an asset that the other entity holds.

a *primary equity interest or *secondary equity interest in an entity; or

a right that the owner of a *primary equity interest or *secondary equity interest in an entity has because of owning the interest;

the benefit has been, is being, is to be, or might be, provided under the scheme; or

the providing of the benefit is reasonably attributable to:

something that has been, is being, is to be, or might be, done or omitted under the scheme (whether before, at the time of, or after, the providing of the benefit) by an entity that is either of those entities or a third entity; or

2 or more such things.

it consists of an increase in the market value of:

an *equity or loan interest in the entity; or

an *indirect equity or loan interest in the entity; and

the increase is reasonably attributable to the first-mentioned benefit.

before, at the same time as, or after it, another indirect value shift happens for which the same entity is the losing entity as for the first indirect value shift; and

having regard to all relevant circumstances, it is reasonable to conclude that the sole or main reason why one of the indirect value shifts happened under a different *scheme from the other was so that its amount would not exceed $50,000.

the *losing entity transferring a *CGT asset to the *gaining entity; or

a right to have the losing entity transfer an asset to the gaining entity.

the asset’s *cost base at that time;

the asset’s cost;

the asset’s market value immediately before the most recent time (if any), since the *losing entity *acquired the asset, when an *affected owner has acquired:

a *primary equity interest in the losing entity; or

an *indirect primary equity interest in the losing entity.

the first entity owns a primary equity interest in the other entity; or

the first entity owns a primary equity interest that is an indirect primary equity interest in the other entity because of one or more other applications of this subsection.

to the extent of at least 95% of their total market value, the *greater benefits consist entirely of:

a right to have services that are covered by section 727-240 provided directly by the losing entity to the gaining entity; or

services that are covered by section 727-240 and have been, are being, or are to be, so provided;

there are *lesser benefits and, as at the *IVS time, the total market value of the lesser benefits is not less than the total of:

the present value of the direct cost to the losing entity of providing the services; and

the present value of a reasonable allocation of the total direct cost to the losing entity of providing services that include the first-mentioned services (so far as it is not already covered by subparagraph (i)).

there are *lesser benefits and, to the extent of at least 95% of their total market value, the lesser benefits consist entirely of:

a right to have services that are covered by section 727-240 provided directly by the gaining entity to the losing entity; or

services that are covered by section 727-240 and have been, are being, or are to be, so provided;

as at the *IVS time, the total market value of the greater benefits is not more than the total of:

the present value of the direct cost to the gaining entity of providing the services; and

the present value of a reasonable allocation of the total direct cost to the gaining entity of providing services that include the first-mentioned services (so far as it is not already covered by subparagraph (i)); and

the present value of a reasonable allocation of the indirect cost to the gaining entity of providing the first-mentioned services; and

the mark-up worked out under subsection (2) or (3) of this section.

doing work (including professional work and giving professional advice or any other kind of advice); or

providing (including allowing use of) facilities for entertainment, recreation or instruction; or

leasing, renting, hiring, or allowing the use of, any asset; or

packaging, transporting or storing any property; or

providing insurance; or

services provided, by a banker to a customer, in the course of the banker carrying on the business of banking; or

lending money or providing any other form of financial accommodation.

in accordance with generally accepted accounting practices; and

to the extent that the services are to be provided in the future, on the basis of a reasonable estimate of those costs.

to the extent that the services consist of or include lending money or providing any other form of financial accommodation—the amount of the loan or other accommodation; or