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INCOME TAX ASSESSMENT ACT 1997 - SECT 727.235 Services provided by gaining entity to losing entity for no more than a commercially realistic price

INCOME TAX ASSESSMENT ACT 1997 - SECT 727.235

Services provided by gaining entity to losing entity for no more than a commercially realistic price

  (1)   An * indirect value shift does not have consequences under this Division if:

  (a)   there are * lesser benefits and, to the extent of at least 95% of their total * market value, the lesser benefits consist entirely of:

  (i)   a right to have services that are covered by section   727 - 240 provided directly by the gaining entity to the losing entity; or

  (ii)   services that are covered by section   727 - 240 and have been, are being, or are to be, so provided;

    or both; and

  (b)   as at the * IVS time, the total market value of the greater benefits is not more than the total of:

  (i)   the present value of the direct cost to the gaining entity of providing the services; and

  (ii)   the present value of a reasonable allocation of the total direct cost to the gaining entity of providing services that include the first - mentioned services (so far as it is not already covered by subparagraph   (i)); and

  (iii)   the present value of a reasonable allocation of the indirect cost to the gaining entity of providing the first - mentioned services; and

  (iv)   the mark - up worked out under subsection   (2) or (3) of this section.

To work out the costs and present values referred to in paragraph   (1)(b),
see section   727 - 245.

  (2)   If it is reasonable to estimate that an entity providing the same quantity of services of the same kind in the same market would charge for them on the basis of a particular percentage mark - up, or on the basis of a percentage mark - up within a particular range, the mark - up for the purposes of subparagraph   (1)(b)(iv) is:

  the total of the respective present values of the costs mentioned in subparagraphs   (1)(b)(i), (ii) and (iii);

multiplied by:

  that percentage mark - up, or the highest percentage in that range.

  (3)   Otherwise, the mark - up for the purposes of subparagraph   (1)(b)(iv) is 10% of the total of the respective present values of the costs mentioned in subparagraphs   (1)(b)(i), (ii) and (iii).

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