INCOME TAX ASSESSMENT ACT 1997 - SECT 727.910 Treatment of value shifted under the direct value shift

INCOME TAX ASSESSMENT ACT 1997 - SECT 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).

  (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.

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

  (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.

  (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).

Table of Subdivisions

Guide to Division   764

764 - A   Source rules