Income Tax Assessment Act 1936

PART X - ATTRIBUTION OF INCOME IN RESPECT OF CONTROLLED FOREIGN COMPANIES  

Division 8 - Active income test  

Subdivision D - General interpretive provisions  

SECTION 440  

440   ASSET DISPOSALS - REVALUATIONS AND ARM'S LENGTH AMOUNTS  

In determining, for the purposes of this Part, whether a company passes the active income test, the following provisions apply in relation to an asset of the company (other than trading stock):

(a) the effect of an asset revaluation is to be disregarded;

(b) subject to section 438 , if:

(i) any consideration paid or payable by the company in respect of the acquisition of the asset; or

(ii) any consideration paid or payable to the company in respect of the disposal of the asset; or

(iii) any expenditure incurred by the company in making capital improvements to the asset; or

(iv) any other amount payable to or by the company that is relevant to determining the revenue, gains or losses concerned;

is not equal to the amount (in this paragraph called the " arm's length amount " ) that the parties to the transaction concerned could have been reasonably expected to have paid if the parties had been acting at arm's length in relation to the transaction - the amount of the consideration or expenditure is to be taken to be equal to the arm's length amount.