Commonwealth Consolidated Acts Commonwealth Consolidated ActsObject
(1) Because intra - group * membership interests in the joining entity are disregarded under subsection 701 - 1(1) (the single entity rule), the object of this section is to provide a mechanism to ensure that the benefit of the pre - CGT status of those interests is not lost. That mechanism involves:
(a) working out the proportion (measured by market value) of the membership interests in the joining entity that have pre - CGT status; and
(b) if the joining entity later ceases being a member of the group, attaching pre - CGT status to that proportion of membership interests in it (see section 711 - 65), subject to integrity rules (see section 711 - 70).
How to work out pre - CGT proportion
(2) The pre - CGT proportion is the amount worked out by dividing:
(a) the sum of the * market value of each * membership interest in the joining entity that is:
(i) held by a * member of the group at the joining time; and
(ii) is a * pre - CGT asset;
by:
(b) the sum of the market value of each membership interest in the joining entity that is held by a member of the group at the joining time.
Modification if joining entity is a trust
(4) If the joining entity is a trust, a * membership interest in it is not taken into account under subsection (2) unless the membership interest is either a unit or an interest in the trust.