Document ID: chunk:federal_register_of_legislation:C2014C00749:clause:15_11:p4
Version: federal_register_of_legislation:C2014C00749
Segment Type: clause
Provision Reference: sch 15 cl 11 (pt 4/20)
Character Range: 294434–297254

(with pre‑shift losses)
  Use the following method statement to work out the decrease in *adjustable value of a *down interest under:
 (a) item 5 or 7 of the table in subsection 725‑250(2); or
 (b) item 3, 5 or 8 of the table in subsection 725‑335(3).

      Method statement
           Step 1. Group together all *down interests of the kind referred to in the relevant item that:

                (a) immediately before the *decrease time, had the same *adjustable value as the down interest; and
                (b) immediately before that time had the same market value as the down interest; and
                (c) sustained the same decrease in market value as the down interest because of the *direct value shift.

           Step 2. Work out the value shifted from that group of *down interests to the *up interests referred to in the relevant item using the formula:

           Step 3. The decrease in *adjustable value of the *down interest under the relevant item is equal to:

Division 727—Indirect value shifting affecting interests in companies and trusts, and arising from non‑arm's length dealings

Table of Subdivisions
 Guide to Division 727
727‑A Scope of the indirect value shifting rules
727‑B What is an indirect value shift
727‑C Exclusions
727‑D Working out the market value of economic benefits
727‑E Key concepts
727‑F Consequences of an indirect value shift
727‑G The realisation time method
727‑H The adjustable value method
727‑K Reduction of loss on equity or loan interests realised before the IVS time
727‑L Indirect value shift resulting from a direct value shift

Guide to Division 727

727‑1  What this Division is about
      If there is a net shift of value between 2 related entities because of a non‑arm's length dealing, this Division:

                (a) prevents losses from arising, because of the value shift, on realisation of direct or indirect equity or loan interests in the losing entity; and
                (b) within limits, prevents gains from arising, because of the value shift, on realisation of direct or indirect equity or loan interests in the gaining entity.
      However, it does so only for interests that are owned by entities involved in the value shift.

Table of sections
727‑5 What is an indirect value shift?
727‑10 How does this Division deal with indirect value shifts?
727‑15 When does an indirect value shift have consequences under this Division?
727‑25 Effect of this Division on realisations at a loss that occur before the nature or extent of an indirect value shift can be fully determined

727‑5  What is an indirect value shift?
 (1) An indirect value shift arises when there is a net shift of value from one entity to another.
Example: Company A transfers property to company B in return for a cash payment. If the market value