| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012563330763
Ruling
Subject: Determination of market value for purpose of calculating available fraction
Question 1
In determining the market value of an entity for the purposes of section 707-325 of the ITAA 1997, should the value of redeemable preference shares issued by B Co be added to the value of ordinary shares issued by B Co?
Answer
No.
Relevant facts and circumstances
It is anticipated A Co (head company of A MEC group) will elect for the ET-1 companies of B MEC group to join the A MEC group.
B Co (provisional head company of B MEC group) has both redeemable preference shares and ordinary shares on issue. The redeemable preference shares are debt for tax and a financial liability for financial accounting purposes.
B Co has revenue tax losses and capital losses.
Relevant legislative provisions
Section 707-325 of the ITAA 1997
Reasons for decision
Question 1
The Commissioner considers it inappropriate to sum the value of the redeemable preference shares and ordinary shares issued by the entity to determine the market value of the entity, as it is necessary to value the entity itself, rather than the interests issued by the entity.
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
