Document ID: chunk:federal_register_of_legislation:C2025C00029:section:6:p3
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 6 (pt 3/33)
Character Range: 4683357–4685864

a trust through holding a fixed entitlement to the income of the trust is non‑arm's length income of the entity if, as a result of a *scheme the parties to which were not dealing with each other at *arm's length in relation to the scheme, one or more of the following applies:
 (a) the amount of the income is more than the amount that the entity might have been expected to derive if those parties had been dealing with each other at arm's length in relation to the scheme;
 (b) if the entity is of a kind referred to in paragraph (8)(a) (about certain small entities)—in acquiring the entitlement or in gaining or producing the income, the entity incurs a loss, outgoing or expenditure of an amount that is less than the amount of a loss, outgoing or expenditure that the entity might have been expected to incur if those parties had been dealing with each other at arm's length in relation to the scheme;
 (c) if the entity is of a kind referred to in paragraph (8)(a) (about certain small entities)—in acquiring the entitlement or in gaining or producing the income, the entity does not incur a loss, outgoing or expenditure that the entity might have been expected to incur if those parties had been dealing with each other at arm's length in relation to the scheme.
 (6) This section:
 (a) applies to a *non‑share equity interest in the same way as it applies to a *share; and
 (b) applies to an *equity holder in a company in the same way as it applies to a shareholder in the company; and
 (c) applies to a *non‑share dividend in the same way as it applies to a *dividend.
 (7) Paragraphs (1)(b) and (c) and (5)(b) and (c) apply to a loss, outgoing or expenditure whether or not it is of capital or of a capital nature.

Certain small entities—general expenses
 (8) If:
 (a) a *complying superannuation entity is:
 (i) a *regulated superannuation fund with no more than 6 members; or
 (ii) a *self managed superannuation fund; and
 (b) as a result of a *scheme the parties to which were not dealing with each other at *arm's length in relation to the scheme:
 (i) in gaining or producing the *ordinary income and *statutory income of the entity (but not in gaining or producing income in relation to any particular asset or assets of the entity), the entity incurs a loss, outgoing or expenditure of an amount; and
 (ii) the amount is less than the amount of a loss, outgoing or expenditure that the entity might have been expected to incur if those parties had been dealing with each other at arm's