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-B - What is an indirect value shift  

SECTION 727-165   Preventing double-counting of economic benefits  

Rights to have economic benefits provided

727-165(1)    
If an economic benefit that has been, is being, is to be, or might be, ^* provided as mentioned in subsection 727-150(3) or 727-855(1) consists of a right to have economic benefits provided, that subsection applies to the right but does not also apply to those economic benefits.

Example:

Acme Ltd enters into an agreement with Paragon Pty Ltd under which Acme is to provide services to Paragon over a 5 year period in return for payments.

Paragon ' s rights under the agreement are economic benefits that Acme provides to Paragon when the agreement is made. The services are economic benefits that Acme is to provide to Paragon.

Because of this subsection, the market value of the rights is taken into account in working out whether there has been an indirect value shift, but the market value of the services is not.

Effect of an economic benefit on interests in the entity to which it is provided

727-165(2)    
If an economic benefit has been, is being, or is to be, ^* provided to an entity, then, for the purposes of subsection 727-150(3) or 727-855(1) , disregard an economic benefit to the extent that:

(a) it consists of an increase in the *market value of:

(i) an ^* equity or loan interest in the entity; or

(ii) an ^* indirect equity or loan interest in the entity; and

(b) the increase is reasonably attributable to the first-mentioned benefit.