Valuation shortcut 5
Membership interests that are unlisted shares
As all membership interests in a wholly-owned subsidiary will be held by the head company or other members of the consolidated group, they will not be listed on a stock exchange. The availability of this valuation shortcut acknowledges that valuing unlisted membership interests is a difficult and complex process.
Where any ESS membership interests in the joining entity have been market valued for Division 13A of the ITAA 1936 or Division 83A of the ITAA 1997, the head company can rely on these valuations to work out the cost of all its membership interests in the joining entity, provided:
- the ESS membership interests acquired before 1 July 2009 were valued for the purposes of either
- Division 13A in accordance with the former sections 139FB and 139FD
- the former Division 13A and
- arose because of the granting of qualifying rights
- those rights have been exercised, or the cessation time in relation to those rights has occurred, and the employee continues to hold the shares
- those rights were valued in accordance with the former sections 139FC, 139FD and 139FE
- the ESS membership interests acquired after 30 June 2009 were valued for the purposes of Division 83A in accordance with any of the following
- subdivision 960-S of the ITAA 1997
- a method for calculating the value of an ESS interest specified by regulation in the Income Tax Assessment Regulations 1997
- from 1 July 2015, a method approved by the Commissioner by legislative instrument, in accordance with section 960-412 of the ITAA 1997.
- the original market valuation was appropriately documented
- the decision to use the existing market valuation is documented and they are, if necessary, updated in accordance with the requirements set out under Use of previous valuations.