Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-10 - FINANCIAL TRANSACTIONS  

Division 250 - Assets put to tax preferred use  

Subdivision 250-B - When this Division applies to you and an asset  

Predominant economic interest

SECTION 250-140   When to retest predominant economic interest under section 250-135  

Purpose for applying section

250-140(1)  
This section applies for the purposes of working out whether this Division applies to you and to an asset that is *put to a tax preferred use. No need to keep retesting if section 250-135 does not apply at start of tax preferred use of asset

250-140(2)  
If section 250-135 does not apply to you and the asset at the time when the *tax preferred use of the asset starts, that section is taken, subject to subsection (4), to continue not to apply to you and the asset.

Note:

This subsection means that if section 250-135 does not apply to the arrangement when the tax preferred use of the asset starts, the arrangement does not need to be retested against section 250-135 until a change of the kind referred to in subsection (4) occurs.

No need to keep retesting if section 250-135 does not apply when you do something to increase value of expected financial benefits

250-140(3)  
If:


(a) you (or a *connected entity), or a *member of the tax preferred sector, do something, or omit to do something, at a particular time that increases the value of the *expected financial benefits in relation to the *tax preferred use of the asset; and


(b) section 250-135 does not apply to the asset at that time;

that section is taken, subject to subsection (4), to continue not to apply to you and the asset.

Note:

This subsection means that if the arrangement is retested against section 250-135 at a particular time and section 250-135 does not apply to the arrangement on that retesting, the arrangement does not need to be again retested against section 250-135 until a change of the kind referred to in subsection (4) occurs.

Retesting when you do something to increase the value of expected financial benefits

250-140(4)  
Subsection (2) or (3) ceases to apply to you and the asset if you (or a *connected entity), or a *member of the tax preferred sector, do something, or omit to do something, that increases the value of the *expected financial benefits in relation to the *tax preferred use of the asset. Certain financial benefits ignored when retesting

250-140(5)  
For the purposes of reapplying section 250-135 to the asset, disregard *financial benefits provided before subsection (2) or (3) of this section ceased to apply to the asset.

Note:

If:

  • (a) subsection (2) or (3) ceases to apply to the asset at a particular time under this subsection; and
  • (b) the asset is retested at that time against section 250-135 ; and
  • (c) on the retesting, that section is found to apply to the asset at that time;
  • subsection (3) will start to apply to the asset again from that time because paragraph (3)(b) will have been satisfied.

    Clarification that retesting only required if you do something to increase value of expected benefits

    250-140(6)  
    To avoid doubt, subsection (2) or (3) does not cease to apply merely because the value of the *expected financial benefits in relation to the asset increase because of something other than action taken, or an omission made, by you (or a *connected entity) or a *member of the tax preferred sector.

    Note:

    This subsection means that retesting under subsection (4) is not triggered by an increase in the value of expected financial benefits that happens because of external circumstances (circumstances external to activities and omissions of yours, your connected entities and members of the tax preferred sector).


     

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