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-L - Indirect value shift resulting from a direct value shift  

SECTION 727-910   Treatment of value shifted under the direct value shift  

727-910(1)    

The first entity is treated as ^* providing economic benefits to the other entity, ^* in connection with the IVS scheme, at the time of a decrease (or future decrease) in the *market value of any of the ^* down interests, to the extent that the decrease is (or will be) covered by subsection 725-155(1) .

727-910(2)    

Despite subsections 727-150(4) and 727-855(2) and (3), the *market value of all economic benefits that subsection (1) of this section treats the first entity as providing to the other entity:

(a) is to be determined as at the time immediately before the ^* IVS time, or immediately before the ^* realisation event, as appropriate; and

(b) is equal to the total value shifted from the ^* down interests to the ^* up interests, as worked out under one or more applications of step 2 of the method statement in section 725-365 or 725-380 .

727-910(3)    
The 2 entities are treated as not dealing with each other at ^* arm ' s length in relation to the providing of those benefits.

727-910(4)    
None of those benefits is treated as consisting of, or including, services provided or a right to have services provided.

Note:

This means that the exclusions in Subdivisions 727-C and 727-G for indirect value shifts involving services will not apply.

727-910(5)    
Except as provided in this section, none of the following is treated as the ^* providing of economic benefits ^* in connection with the IVS scheme:

(a) a decrease (or future decrease) in the *market value of ^* down interests owned by the first entity or the other entity, to the extent that the decrease is (or will be) covered by subsection 725-155(1) ;

(b) an increase (or future increase) in the market value of ^* up interests owned by the first entity or the other entity, to the extent that the increase is (or will be) covered by subsection 725-145(3) ;

(c) an issue of ^* up interests at a ^* discount to the first entity or the other entity, to the extent that the issue is (or will be) covered by subsection 725-145(2) .

Note:

Value shifted from down interests owned by the other entity to up interests owned by the first entity are dealt with by a separate application of this Subdivision to those interests (because of paragraphs 727-905(2)(a) and (b)).