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-A - Scope of the direct value shifting rules  

SECTION 725-65   Cause of the value shift  

725-65(1)    
It must be the case that one or more of the following:

(a) the target entity;

(b) the controller;

(c) an entity that was an ^* associate of the controller at some time during or after the ^* scheme period;

(d) an ^* active participant in the ^* scheme;

(either alone or together with one or more other entities) did under the scheme the one or more things:

(e) to which the decrease in the *market value of the ^* down interests is reasonably attributable; and

(f) to which the increase in the market value of the ^* up interests, or the issue of up interests at a ^* discount, is reasonably attributable, or that is or include the issue of up interests at a ^* discount.

Active participants (if target entity is closely held)

725-65(2)    
An entity (the first entity ) is an active participant in the ^* scheme if, and only if:

(a) at some time during the ^* scheme period, the target entity has fewer than 300 members (in the case of a company) or fewer than 300 beneficiaries (in the case of a trust); and

(b) the first entity has actively participated in, or directly facilitated, the entering into or carrying out of the ^* scheme (whether or not it did so at the direction of some other entity); and

(c) the first entity:

(i) owns a ^* down interest at the ^* decrease time; or

(ii) owns an ^* up interest at the ^* increase time or has an up interest issued to it at a ^* discount because of the ^* direct value shift.

When an entity has 300 or more members or beneficiaries

725-65(3)    
Section 124-810 (under which certain companies and trusts are not regarded as having 300 or more members or beneficiaries) also applies for the purposes of this Division.

725-65(4)    
In addition, this Division applies to a ^* non-fixed trust as if it did not have 300 or more beneficiaries.