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Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-95 - VALUE SHIFTING  

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

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Subdivision 725-F - Value adjustments and taxed gains  

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SECTION 725-365  

725-365   Decreases in adjustable values of down interests (with pre-shift gains), and taxing events generating a gain  

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Use the following method statement:


(a) to work out the amount of the gain for a * taxing event generating a gain under:


(i) section 725-245 ; or

(ii) item 2, 4 or 7 of the table in subsection 725-335(3) ; and


(b) to work out the decrease in * adjustable value of a * down interest under:


(i) item 1, 2, 3, 4 or 6 of the table in subsection 725-250(2) ; or

(ii) item 1, 2, 4 or 7 of the table in subsection 725-335(3) .
Method statement

Step 1.

Group together all * down interests that:

  • (a) are of the kind referred to in the relevant item; and
  • (b) immediately before the * decrease time, had the same * adjustable value as the down interest; and
  • (c) immediately before that time had the same * market value as the down interest; and
  • (d) sustained the same decrease in market value as the down interest because of the * direct value shift.


    • Step 2.

    Work out the value shifted from that group of * down interests to the * up interests referred to in the relevant item using the following formula:


    Sum of the decreases in * market value of all * down interests in the group because of the * direct value shift × Sum of the increases in * market value
    of, and * discounts on the issue of,
    those * up interests because of the
                                    * direct value shift                                
    Sum of the increases in * market value
    of, and * discounts given on the issue
    of, all * up interests because of the
    * direct value shift


    Step 3.

    Work out the notional adjustable value of the value shifted from that group of * down interests to those * up interests using the formula:


    Sum of the * adjustable values, immediately before the * decrease time, of all * down interests in the group ×                             Value shifted                            
    Sum of the * market values,
    immediately before the
    * decrease time, of all * down
    interests in the group


    Step 4.

    The decrease in the * adjustable value of the * down interest under the relevant item is equal to:


                          Notional adjustable value                      
    Number of * down interests in the group


    Step 5.

    For a * taxing event generating a gain under the relevant item, the amount of the gain is equal to:


    Value shifted − Notional adjustable value
    Number of * down interests in the group

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