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-K - Reduction of loss on equity or loan interests realised before the IVS time  

SECTION 727-855   Presumed indirect value shift  

727-855(1)    

The ^* scheme results in a presumed indirect value shift affecting the ^* realisation event if, and only if, as at the time of the realisation event, it is reasonable to conclude that the total *market value of the economic benefits (the greater benefits ) that:

(a) the ^* prospective losing entity has ^* provided, is providing, is to provide, or might provide, ^* in connection with the ^* scheme, to another entity, or to each of 2 or more other entities; and

(b) can be identified (even if the other entity or entities cannot be identified or are not all in existence, or the provision of some or all of the economic benefits is contingent);

exceeds:

(c) the total market value of the economic benefits (the lesser benefits ) that:

(i) have been, are being, are to be, or might be, provided to the prospective losing entity in connection with the scheme; and

(ii) can be identified (even if the entity or entities providing the benefits cannot be identified or are not all in existence, or the provision of some or all of the economic benefits is contingent); or

(d) if there are no economic benefits covered by paragraph (c) - nil.

That excess is the amount of the presumed indirect value shift, which happens at the time of the realisation event.

727-855(2)    

The *market value of an economic benefit is to be determined as at the earliest time when it is reasonable to conclude that:

(a) the economic benefit can be identified; and

(b) paragraph 727-150(2)(b) is satisfied for that benefit;

if that time is before the ^* realisation event.

727-855(3)    

Otherwise, the *market value of the economic benefit is to be determined as at the time immediately before the ^* realisation event, taking account of any contingency to which provision of the benefit is subject at that time.

For more rules affecting how the market value of an economic benefit is determined, see Subdivision 727-D (as applying because of subsection 727-865(1) ).

727-855(4)    
An entity referred to in paragraph (1)(a) need not be a party to the ^* scheme. A benefit can be provided by act or omission.