• Step 2: Working out the opening value - box A

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    This step decides the opening value of the FLP.

    If you had the interest in the FLP at the beginning of a notional accounting period, the opening value is the value on the day before the first day of the period.

    Opening value where the deemed rate of return method has been applied in the previous year

    If you used the deemed rate of return method in the immediately previous notional accounting period, work out the opening value as follows.

    • Determine the deemed value of the FLP at the commencement of the previous notional accounting period.
    • Add the FIF income of the FLP for its previous notional accounting period.
    • Add the value of any premiums paid during the previous notional accounting period.
    • Take away any distributions the FLP made in the previous notional accounting period. [sections 586 and 590]

    Opening value where the interest is acquired during the notional accounting period

    If you acquired the interest in the FLP during a notional accounting period, the opening value is its cost if you paid the full consideration. In any other case, the value is the amount of the first premium paid. [paragraph 586(b) and section 591]

    Note:

    • There are special rules for working out the opening value in the first operative year of the measures - that is, 1 January 1993 to 30 June 1993. [section 588]
    • There are also special rules when reverting to the deemed rate of return method following the application of the cash surrender method. [subsections 536(8) to (9)]
    Last modified: 27 May 2005QC 17512