Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 727.100

    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).