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 725-320   Consequences for down interest or up interest as a revenue asset  

725-320(1)    
The consequences of the ^* direct value shift for your ^* revenue assets are of one or more of these 3 kinds:

(a) the ^* adjustable values of ^* down interests of which you are an ^* affected owner are reduced (see subsection (2));

(b) the adjustable values of ^* up interests of which you are an affected owner are uplifted (see subsection (3));

(c) one or more ^* taxing events generating a gain for down interests of which you are an affected owner (see subsection (5)).

Effect of reduction or uplift of adjustable value

725-320(2)    
If the ^* adjustable value of a ^* down interest that is your ^* revenue asset is decreased under section 725-335 , you are treated as if:

(a) ^* immediately before the ^* decrease time, you had sold the interest to someone else for its ^* adjustable value immediately before the decrease time; and

(b) immediately afterwards, you had bought the interest back for the reduced adjustable value; and

(c) from the time when you bought it back, the interest continued to be a revenue asset, for the same reasons as it was a revenue asset before you sold it.

725-320(3)    
If the ^* adjustable value of an ^* up interest that is your ^* revenue asset is uplifted under section 725-335 , you are treated as if:

(a) ^* immediately before the ^* increase time, you had sold the interest to someone else for its ^* adjustable value immediately before the increase time; and

(b) immediately afterwards, you had bought the interest back for the uplifted adjustable value; and

(c) from the time when you bought it back, the interest continued to be a revenue asset, for the same reasons as it was a revenue asset before you sold it.

725-320(4)    

However, the uplift in ^* adjustable value is taken into account only to the extent that the amount of the uplift is still reflected in the *market value of the interest when it is disposed of or otherwise realised.

Taxing event generating a gain

725-320(5)    
For each ^* taxing event generating a gain under an item in the table in subsection 725-335(3) , the gain is included in your assessable income for the income year in which the ^* decrease time happens.