Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-95 - VALUE SHIFTING  

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Part 3-95 inserted by No 90 of 2002.

Division 727 - Indirect value shifting affecting interests in companies and trusts, and arising from non-arm ' s length dealings  

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Div 727 inserted by No 90 of 2002.

Subdivision 727-A - Scope of the indirect value shifting rules  

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Subdiv 727-A inserted by No 90 of 2002.

SECTION 727-100  

727-100   When an indirect value shift has consequences under this Division  

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An ^* indirect value shift (see Subdivision 727-B ) has consequences under this Division if, and only if:

(a) the ^* losing entity is at the time of the indirect value shift a company or trust (except one listed in section 727-125 (about superannuation entities)); and

(b) in relation to either or both of the following:

(i) the losing entity ^* providing one or more economic benefits to the gaining entity ^* in connection with the ^* scheme from which the indirect value shift results;

(ii) the gaining entity providing one or more economic benefits to the losing entity in connection with the scheme;

the 2 entities are not dealing with each other at ^* arm ' s length; and

(c) either or both of sections 727-105 and 727-110 are satisfied; and

(d) no exclusion in Subdivision 727-C applies.

Note 1:

The consequences for direct and indirect interests in the losing entity or in the gaining entity are set out in Subdivision 727-F . If those consequences are to be worked out using the realisation time method (under Subdivision 727-G ), there are further exclusions for certain 95% services indirect value shifts: see section 727-700 .

Note 2:

An indirect value shift does not have consequences for interests in the losing entity or gaining entity owned immediately before the IVS time by an entity that:

• is a small business entity for each income year that includes any of the IVS period; or

• would satisfy the maximum net asset value test in section 152-15 throughout the IVS period.

See subsection 727-470(2) .

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S 727-100 amended by No 80 of 2007 , s 3 and Sch 3 item 156, by substituting " a small business entity " for " eligible to be an STS taxpayer " in note 2, applicable in relation to the 2007-08 income year and later income years.

S 727-100 inserted by No 90 of 2002.

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