Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) For the purposes of step 7 in the table in section 705‑60, the step 7 amount is worked out using the following formula:
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where:
"acquired deductions" means all deductions covered by subsection (2) that are not owned deductions.
"owned deductions" means the sum of all deductions for which the following requirements are satisfied:
(a) the deduction is covered by subsection (2);
(b) assuming the expenditure that gave rise to the deduction were instead a profit that was earned at the time the expenditure was incurred, a distribution of that profit would have been a distribution made to the joined group out of profits that accrued to the joined group before the joining time (see subsection 705‑90(5)).
(2) This subsection covers any deduction to which the * head company becomes entitled under section 701‑5 as a result of the joining entity becoming a * subsidiary member of the joined group, other than a deduction for expenditure:
(a) that is, forms part of or reduces, the cost of an asset of the joining entity that becomes an asset of the head company because subsection 701‑1(1) (the single entity rule) applies; or
(b) to which section 110‑40 (about expenditure on assets acquired before 7.30 pm on 13 May 1997) applies; or
(c) to the extent that, in applying subsection 705‑90(2) for the purpose of working out the step 3 amount in the table in section 705‑60, the expenditure reduced the amount of the undistributed profits mentioned in that subsection.