Document ID: chunk:federal_register_of_legislation:C2016A00010:clause:1_4:p2
Version: federal_register_of_legislation:C2016A00010
Segment Type: clause
Provision Reference: sch 1 cl 4 (pt 2/4)
Character Range: 14298–16863

an active asset for the period to which those financial benefits relate;
 (g) the value of those financial benefits reasonably relates to that economic performance;
 (h) the parties to the arrangement deal with each other at *arm's length in making the arrangement.

Matters affecting the 5‑year maximum period
 (2) The condition in paragraph (1)(e) is not met, and is treated as never having been met, for the right if:
 (a) the *arrangement includes an option to extend or renew the arrangement; or
 (b) the parties to the arrangement vary the arrangement; or
 (c) those parties enter into another arrangement over the *CGT asset or a business for which it is reasonably expected that the CGT asset will be an *active asset;
so that a party could, or does, provide *financial benefits under the right (or one or more equivalent rights) over a total period ending later than 5 years after the end of the income year in which the *CGT event happens.
 (3) For the purposes of paragraph (1)(e) or subsection (2), in working out the period over which *financial benefits under a right can be provided, disregard any part of an *arrangement that allows for an entity to defer providing such a financial benefit if:
 (a) the deferral is contingent on an event happening that is beyond the control of the parties to the arrangement; and
 (b) the deferral cannot change the amount of any financial benefit provided, or to be provided, under the right; and
 (c) when the arrangement is entered into, the contingent event is not reasonably expected to happen.

Look‑through earnout rights—rights for ending other rights
 (4) A look‑through earnout right is a right to receive one or more future *financial benefits that:
 (a) are for ending a right to which subsection (1) applies; and
 (b) are certain.
Note: This subsection will not apply if the old right ends as described in subsection (2), as subsection (2) causes the old right to be treated as if it had never been a right to which subsection (1) applies.

118‑570  Extra ways a CGT asset can be an active asset
 (1) For the purposes of this Subdivision, treat a *CGT asset as if it were an active asset of an entity at a particular time, if:
 (a) the entity owns it at that time; and
 (b) it is either a *share in a company, or an interest in a trust; and
 (c) at that time, the entity:
 (i) is a *CGT concession stakeholder of the company or trust; or
 (ii) if the entity is not an individual—has a *small business participation percentage in the company or trust of at least 20%; and
 (d) at that time, the company