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.