Document ID: chunk:federal_register_of_legislation:C2014C00749:clause:15_11:p7
Version: federal_register_of_legislation:C2014C00749
Segment Type: clause
Provision Reference: sch 15 cl 11 (pt 7/20)
Character Range: 301812–304553

value shift has consequences under this Division
727‑105 Ultimate controller test
727‑110 Common‑ownership nexus test (if both losing and gaining entities are closely held)
727‑125 No consequences if losing entity is a superannuation entity

727‑95  Main object
  The main object of this Division is:
 (a) to prevent inappropriate losses from arising on the realisation of direct or indirect equity or loan interests in an entity from which there has been a net shift of value because of a non‑arm's length dealing; and
 (b) to prevent inappropriate gains from arising on the realisation of direct or indirect equity interests in the entity to which that value has been shifted;
in cases where the 2 entities are related as set out in this Division.

727‑100  When an indirect value shift has consequences under this Division
  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 eligible to be an STS taxpayer 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).

727‑105  Ultimate controller test
  It must be the case that, at some time during the *IVS period:
 (a) the *losing entity and the *gaining entity have the same *ultimate controller; or
 (b) the ultimate controller of the losing entity is the same entity that was the ultimate controller of the gaining entity at a different time during that period; or
 (c) the gaining entity is