Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-5 - CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS  

Division 164 - Non-share capital accounts for companies  

Operative provisions  

SECTION 164-15   Credits to non-share capital account  

164-15(1)    

If the company issues a *non-share equity interest in the company on or after 1 July 2001, there is a credit to the *non-share capital account equal to:

Amount received − Share capital account credit

where:

amount received
is the *market value, when it is provided, of the consideration the company receives for the issue of the interest.

share capital account credit
is the amount of any credit made to the company ' s *share capital account in respect of the issue of the interest.

Note:

The issue of a non-share equity interest can give rise to a credit to the company ' s share capital account if the interest consists, for example, of a stapled security that includes a share in the company ' s capital.

164-15(2)    

If paragraph 164-10(1)(c), (d) or (e) applies in relation to a particular interest in the company, there is a credit to the *non-share capital account at the change time referred to in that paragraph of an amount equal to:

Amount received

−

Share capital account credit

−

Amount returned

where:

amount received
is the *market value, when it was provided, of the consideration the company received for the issue of the interest.

amount returned
is so much of the amount received as has been returned to a holder of the interest before the change time.

share capital account credit
is the amount of any credit made to the company ' s *share capital account in respect of the issue of the interest.

164-15(3)    
If the company has a *non-share capital account at the beginning of 1 July 2001 because of a *non-share equity interest the company issued before 1 July 2001, there is a credit to the non-share capital account on that day for each non-share equity interest in the company that:

(a) was issued before 1 July 2001; and

(b) is still in existence on 1 July 2001.

164-15(4)    

The amount of the credit under subsection (3) is:

Amount received − Return of amount received − Share capital account credit

where:

amount received
is the *market value, when it is provided, of the consideration the company receives for the issue of the interest.

return of amount received
is the sum of the amounts paid before 1 July 2001 by way of return, in whole or in part, of the amount received.

share capital account credit
is the sum of any amounts credited before 1 July 2001 to the company ' s *share capital account in respect of the issue of the interest.

164-15(5)    

To avoid doubt, if:

(a) it appears that a credit to the company ' s *non-share capital account has arisen under this section because an interest in the company appears to be, or have become, an *equity interest at a time in a particular income year; and

(b) because subsection 974-75(6) or 974-110(1A) is subsequently found to apply in relation to the interest and that income year, the interest was not in fact, or did not in fact become, an equity interest at that time;

the credit referred to in paragraph (a) is taken never to have arisen.