Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-95 - VALUE SHIFTING  

Division 727 - Indirect value shifting affecting interests in companies and trusts, and arising from non-arm ' s length dealings  

Subdivision 727-G - The realisation time method  

Operative provisions

SECTION 727-630   How cap in section 727-625 applies if affected interest is also trading stock or a revenue asset  

727-630(1)    
This section affects how to work out the total gain reductions and the total loss reductions for the purposes of section 727-625 if:

(a) a ^* realisation event covered by that section happens to an ^* equity or loan interest, or to an ^* indirect equity or loan interest, in the ^* losing entity or in the ^* gaining entity; and

(b) the interest is also ^* trading stock or a ^* revenue asset at the time of the event.

Trading stock

727-630(2)    
In the case of an ^* equity or loan interest, or an ^* indirect equity or loan interest, in the ^* losing entity that is ^* trading stock at that time:

(a) the amount (if any) by which section 727-615 or 727-850 reduces a loss worked out under section 977-25 or 977-30 (about realisation events for trading stock) that would, apart from this Division, be ^* realised for income tax purposes by the event is taken into account; and

(b) the amount (if any) by which section 727-615 or 727-850 reduces a loss worked out under section 977-10 (about realisation events for CGT assets) that would, apart from this Division, be ^* realised for income tax purposes by the event is not taken into account;

in working out the total loss reductions.

727-630(3)    
In the case of an ^* affected interest in the ^* gaining entity that is ^* trading stock at that time:

(a) the amount (if any) by which section 727-620 reduces a gain worked out under section 977-35 or 977-40 (about realisation events for trading stock) that would, apart from this Division, be ^* realised for income tax purposes by the event is taken into account; and

(b) the amount (if any) by which section 727-620 reduces a gain worked out under section 977-15 (about realisation events for CGT assets) that would, apart from this Division, be ^* realised for income tax purposes by the event is not taken into account;

in working out the total gain reductions.

Revenue asset

727-630(4)    
In the case of an ^* equity or loan interest, or an ^* indirect equity or loan interest, in the ^* losing entity that is a ^* revenue asset at that time, the greater of the following is taken into account in working out the total loss reductions:

(a) the amount (if any) by which section 727-615 or 727-850 reduces a loss worked out under section 977-55 (about realisation events for revenue assets) that would, apart from this Division, be ^* realised for income tax purposes by the event;

(b) the amount (if any) by which section 727-615 or 727-850 reduces a loss worked out under section 977-10 (about realisation events for CGT assets) that would, apart from this Division, be ^* realised for income tax purposes by the event.

727-630(5)    
In the case of an ^* affected interest in the ^* gaining entity that is a ^* revenue asset at that time, the greater of the following amounts is taken into account in working out the total gain reductions:

(a) the amount (if any) by which section 727-620 reduces a gain worked out under section 977-55 (about realisation events for revenue assets) that would, apart from this Division, be ^* realised for income tax purposes by the event;

(b) the amount (if any) by which section 727-620 reduces a gain worked out under section 977-15 (about realisation events for CGT assets) that would, apart from this Division, be ^* realised for income tax purposes by the event.