Income Tax Assessment Act 1997
SECTION 705-85 Liabilities of the joining entity - increases for purposes of step 2 in working out allocable cost amount
Increase in step 2 amount for employee share interests
705-85(1)
If any * membership interest (an employee share interest ) in the joining entity needed to be disregarded under section 703-35 in order for the joining entity to be a * wholly-owned subsidiary of the * head company at the joining time, the step 2 amount worked out under section 705-70 is increased by the sum of the * market values of those interests, reduced in each case by the reduction amount (if any) worked out under subsection (2) of this section.
Reduction amount
705-85(2)
There is a reduction amount if the * market value of the employee share interest at the time it was * acquired by the employee is more than the consideration paid or given for its acquisition. The reduction amount is worked out by multiplying the market value of the employee share interest at that time by the factor worked out using the formula:
![Graphic](/law/view/sgif/cch-leg2/graphic_24390135.gif)
where:
market value of all membership interests
means the
*
market value of all
*
membership interests in the joining entity just before the employee share interest was
*
acquired.
market value of head company's membership interests
means the
*
market value, just before the employee share interest was
*
acquired, of any
*
membership interests that the
*
head company held, directly or indirectly in the joining entity, continuously from that time until the joining time.
Increase to cover certain non-membership equity interests and certain equity interests
705-85(3)
The step 2 amount worked out under section 705-70 is increased by:
(a) the amount that would be the balance of the joining entity's *non-share capital account, assuming that:
(i) if the joining entity is not a company - the joining entity were a company; and
(ii) each *non-membership equity interest (if any) in the joining entity held at the joining time by a person other than a *member of the joined group were a *non-share equity interest in the joining entity; and
(iii) the non-share equity interests (if any) mentioned in subparagraph (ii) were the only non-share equity interests in the joining entity; and
(b) the *market value of each thing that, in accordance with the joining entity's * accounting principles for tax cost setting, is equity in the joining entity at the joining time, where the thing is also a * debt interest.
Increase to cover ADI restructure preference share interests
705-85(4)
If any *share in the joining entity needed to be disregarded under section 703-37 in order for the joining entity to be a *wholly-owned subsidiary of the *head company at the joining time, the step 2 amount worked out under section 705-70 is increased by the sum of the *market values of those shares.
Disclaimer and notice of copyright applicable to materials provided by CCH Australia Limited
CCH Australia Limited ("CCH") believes that all information which it has provided in this site is accurate and reliable, but gives no warranty of accuracy or reliability of such information to the reader or any third party. The information provided by CCH is not legal or professional advice. To the extent permitted by law, no responsibility for damages or loss arising in any way out of or in connection with or incidental to any errors or omissions in any information provided is accepted by CCH or by persons involved in the preparation and provision of the information, whether arising from negligence or otherwise, from the use of or results obtained from information supplied by CCH.
The information provided by CCH includes history notes and other value-added features which are subject to CCH copyright. No CCH material may be copied, reproduced, republished, uploaded, posted, transmitted, or distributed in any way, except that you may download one copy for your personal use only, provided you keep intact all copyright and other proprietary notices. In particular, the reproduction of any part of the information for sale or incorporation in any product intended for sale is prohibited without CCH's prior consent.