(1) The object of this section is to ensure that if any of the following are not held by * members of either group:
(a) certain employee share interests in * subsidiary members of the acquired group;
(b) certain * non-membership equity interests in subsidiary members of the acquired group;
(c) certain preference share interests in subsidiary members of the acquired group;
and are therefore part of the cost of acquiring the acquired group, they increase the acquiring group's * allocable cost amount for the acquired group.
Increase for certain membership interests in subsidiary members of acquired group
(2) Subsections 705-85(1), (2) and (4) have effect as if a * membership interest in a * subsidiary member of the acquired group were a membership interest in the * head company of that group.
Non-membership equity interests
(3) Paragraph 705-85(3)(a) has effect as if it also increased the step 2 amount worked out under section 705-70 by the amount that would be the sum of the balances of the * non-share capital accounts of the * subsidiary members of the acquired group, assuming that:
(a) for a subsidiary member that is not a company--the subsidiary member were a company; and
(b) each * non-membership equity interest (if any) in a subsidiary member held at the acquisition time by a person other than a * member of the acquiring group or acquired group were a * non-share equity interest in the subsidiary member; and
(c) the non-share equity interests (if any) mentioned in paragraph (b) were the only non-share equity interests in the subsidiary member.
Guide to Subdivision 705-D