Income Tax Assessment Act 1936

PART IVA - SCHEMES TO REDUCE INCOME TAX  

SECTION 177M   DIVERTED PROFITS TAX - SUFFICIENT ECONOMIC SUBSTANCE TEST  

177M(1)    
This section applies in relation to the relevant taxpayer, in relation to the DPT tax benefit, if the profit made as a result of the scheme by each entity covered by subsection (2) reasonably reflects the economic substance of the entity ' s activities in connection with the scheme.

177M(2)    
This subsection covers an entity if:

(a) the entity is the relevant taxpayer or an associate (within the meaning given by section 318 ) of the relevant taxpayer; and

(b) any of the following apply:

(i) the entity entered into or carried out the scheme or any part of the scheme;

(ii) the entity is otherwise connected with the scheme or any part of the scheme.

177M(3)    
However, subsection (2) does not cover an entity if the entity ' s role in the scheme is minor or ancillary.

177M(4)    
In determining whether the profit made as a result of the scheme by an entity reasonably reflects the economic substance of the entity ' s activities in connection with the scheme, have regard to:

(a) the functions that the entity performs in connection with the scheme, taking into account assets used and risks assumed by the entity in connection with the scheme; and

(b) the documents covered by section 815-135 of the Income Tax Assessment Act 1997 , to the extent that they are relevant to the matters mentioned in paragraph (a) or to any other aspect of the determination; and

(c) any other relevant matters.