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 727-720   Abnormal service arrangement reduces value of losing entity that is not a group service provider by at least $500,000  

727-720(1)    
It must be the case that at no time during the period when the owner owned the interest did the sole or dominant activity of the ^* losing entity consist of providing services as mentioned in subsection 727-715(1) .

727-720(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;

(b) each ^* predominantly-services indirect value shift that meets either of these conditions:

(i) its amount was less than $500,000 and it happened within 4 years before the realisation event, or at the same time as the realisation event;

(ii) its amount was $500,000 or more and it happened at any time before the realisation event, or at the same time as the realisation event;

and that meets all of these conditions:

(iii) the same entity is the losing entity for it as for the 95% services indirect value shift;

(iv) it happened under a different ^* scheme from the 95% services indirect value shift; and

(v) having regard to all relevant circumstances, it is reasonable to conclude that the sole or main reason why it happened under a different scheme was to prevent the conditions in section 727-705 , 727-710 , 727-715 or this section from being met.

727-720(3)    

It must also be reasonable to conclude that the total *market value is less than it would have been by at least:

(a) $500,000, 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 $10,000,000; or

(b) 5% of the total of those ^* adjustable values, if that total is greater than $10,000,000 and less than or equal to $100,000,000; or

(c) $5,000,000, if that total is greater than $100,000,000.

727-720(4)    
The providing of the services mentioned in paragraph 727-700(2)(a) or (b) by the losing entity must not be in the ordinary course of its business.