Document ID: chunk:federal_register_of_legislation:C2010C00690:clause:1_3:p2
Version: federal_register_of_legislation:C2010C00690
Segment Type: clause
Provision Reference: sch 1 cl 3 (pt 2/20)
Character Range: 99544–102305

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

 (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:
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 rights, options and certain equity interests

 (3) The step 2 amount worked out under section 705‑70 is increased by:
 (a) the *market value of any right or option (including a contingent right or option), created or issued by the joining entity, to acquire a *membership interest in the joining entity, where that right or option is held at the joining time by a person other than a *member of the joined group; and
 (b) the market value of each thing that, in accordance with *accounting standards, or statements of accounting concepts made by the Australian Accounting Standards Board, is equity in the joining entity at the joining time, where the thing is also a *debt interest.

705‑90  Undistributed, frankable profits accruing to joined group before joining time—step 3 in working out allocable cost amount

 (1) For the purposes of step 3 in the table in section 705‑60, the step 3 amount is the sum of all fully franked dividends (within the meaning of subsection 46FA(11) of the Income Tax Assessment Act 1936) that the entity that is the *head company at the joining time would have received, on the assumptions in subsection (2) of this section, in respect of *membership interests that it held continuously until that time either directly or indirectly through interposed entities.

Assumptions

 (2) The assumptions are that:
 (a) the undistributed profits of the joining entity at the joining time, other than excluded profits (see subsection (3)), had been distributed as dividends to holders of *membership interests as those profits were earned; and
 (b) the dividends were franked in accordance with section 160AQF of the Income Tax Assessment Act