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  

95% services indirect value shifts that are not excluded

SECTION 727-710   Ongoing or recent service arrangement reduces value of losing entity by at least $100,000  

727-710(1)  
Either or both of these must be true:


(a) when the * realisation event mentioned in subsection 727-700(1) happens, some or all of the services mentioned in paragraph 727-700(2)(a) or (b) have not yet been provided; or


(b) some or all of those services have been provided in the income year (of the * losing entity) in which the realisation event happens, or in the previous income year.

727-710(2)  


It must be reasonable to conclude that the total (the total market value ) of the * market values, immediately before the * realisation event, of * primary interests in the * losing entity then owned by * affected owners is less than it would have been if none of the following had happened:


(a) the * 95% services indirect value shift; and


(b) all other * predominantly-services indirect value shifts that satisfy subsection (1) (or that would satisfy it if they were * 95% services indirect value shifts).

727-710(3)  


It must also be reasonable to conclude that the total * market value is less than it would have been by at least:


(a) $100,000, if the total of the * adjustable values, immediately before the * realisation event, of the * primary interests referred to in subsection (2) is less than or equal to $2,000,000; or


(b) 5% of the total of those * adjustable values, if that total is greater than $2,000,000 and less than or equal to $10,000,000; or


(c) $500,000, if that total is greater than $10,000,000.

727-710(4)  
For the purposes of subsections (2) and (3), disregard an * indirect value shift referred to in paragraph (2)(a) or (b) if services are provided directly by the * losing entity to the * gaining entity under the * scheme before the income year (of the losing entity) before the one in which the * realisation event happened.


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