Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-95 - VALUE SHIFTING  

Division 725 - Direct value shifting affecting interests in companies and trusts  

Subdivision 725-E - Consequences for down interest or up interest as trading stock or a revenue asset  

SECTION 725-335   How to work out those consequences  

725-335(1)  
This section sets out the consequences of the * direct value shift for a * down interest or * up interest as * trading stock or a * revenue asset.

725-335(2)  


If you have both *trading stock and *revenue assets, items 1 and 2 of the table in subsection (3) can apply once to the trading stock and again to the revenue assets. The other items apply (if at all) to the trading stock and revenue assets together. Decreases and uplifts in adjustable value

725-335(3)  


To the extent that the * direct value shift is from * down interests specified in an item in the table to * up interests specified in that item:


(a) the * adjustable value of each of those down interests is decreased by the amount worked out under the section (if any) specified for the down interests in the last column of that item; and


(b) the adjustable value of each of those * up interests is uplifted by the amount worked out under the section (if any) specified for the up interests in that column.


Consequences for down interest or up interest as trading stock or revenue asset
Item To the extent that the direct value shift is from: To: The decrease or uplift is worked out under:
1 *down interests owned by you that:

(a) are of the one kind (either your *trading stock or your *revenue assets ); and

(b) have *pre-shift gains
*up interests owned by you that are of that same kind for the down interests: section 725-365; and

for the up interests: section 725-370
2 *down interests owned by you that:

(a) are of the one kind (either your *trading stock or your *revenue assets ); and

(b) have *pre-shift gains
*up interests owned by you that are of the other kind (either your revenue assets or your trading stock ) for the down interests: section 725-365; and

for the up interests: section 725-375
3 *down interests owned by you that:

(a) are your *trading stock or *revenue assets ; and

(b) have *pre-shift losses
*up interests owned by you that are of that same kind or of the other kind for the down interests: section 725-380; and

for the up interests: section 725-375
4 *down interests owned by you that:

(a) are your *trading stock or *revenue assets ; and

(b) have *pre-shift gains
*up interests owned by you that are neither your revenue assets nor your trading stock for the down interests: section 725-365
5 *down interests owned by you that:

(a) are your *trading stock or *revenue assets ; and

(b) have *pre-shift losses
*up interests owned by you that are neither your revenue assets nor your trading stock for the down interests: section 725-380
6 *down interests owned by you that are neither your *revenue assets nor your *trading stock *up interests owned by you that are your trading stock or revenue assets for the up interests: section 725-375
7 *down interests owned by you that:

(a) are your *trading stock or *revenue assets ; and

(b) have *pre-shift gains
up interests owned by other *affected owners for the down interests: section 725-365
8 *down interests owned by you that:

(a) are your *trading stock or *revenue assets ; and

(b) have *pre-shift losses
*up interests owned by other *affected owners for the down interests: section 725-380
9 *down interests owned by other *affected owners *up interests owned by you that are your *trading stock or *revenue assets for the up interests: section 725-375
10 *down interests owned by you that are your *trading stock or *revenue assets *up interests owned by entities that are not *affected owners (there are no decreases or uplifts)
11 *down interests owned by entities that are not *affected owners *up interests owned by you that are your *trading stock or * revenue assets (there are no decreases or uplifts)

Reducing uplift to prevent double increase in adjustable value

725-335(3A)  


However, if, apart from paragraph (3)(b), an amount is included, as a result of the *scheme under which the *direct value shift happens, in the *adjustable value of an *up interest that is your *trading stock or *revenue asset, the uplift in the adjustable value of the interest under that paragraph is reduced by that amount. Taxing events generating a gain

725-335(4)  
To the extent that the * direct value shift is from * down interests:


(a) of which you are an * affected owner; and


(b) that are specified in item 2, 4 or 7 in the table in subsection (3);

to * up interests specified in that item, those up interests give rise to a taxing event generating a gain for you under that item on each of those down interests. The gain is worked out under section 725-365.


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