Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p12
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 12/16)
Character Range: 6760169–6762834

value shift:
 (a) has consequences under Division 725 for an entity as an *affected owner of *down interests (or would do so apart from section 725‑90 (about direct value shifts that will be reversed)); and
 (b) also has consequences under that Division for another entity as an affected owner of *up interests (or would do so apart from section 725‑90);
the rest of this Subdivision has effect, for the purposes of Subdivisions 727‑A to 727‑K, in order to determine:
 (c) whether the IVS scheme results in an *indirect value shift, from the first entity to the other entity, that has consequences under this Division; and
 (d) whether the IVS scheme has consequences under Subdivision 727‑K because it results in a *presumed indirect value shift affecting a *realisation event happening to *equity or loan interests, or to *indirect equity or loan interests, in the first entity; and
 (e) those consequences.
Note: Section 725‑50 sets out when a direct value shift has consequences under Division 725.
 (3) If:
 (a) the IVS scheme is the DVS scheme; and
 (b) subsection 725‑145(2) is satisfied for the *direct value shift (because one or more equity or loan interests in the target entity are issued at a discount); but
 (c) subsection 725‑145(3) (about an increase in the market value of one or more equity or loan interests in the target entity) is not satisfied for the direct value shift;
Subdivisions 727‑A to 727‑K apply to the IVS scheme only as provided in this section.
 (4) Otherwise, those Subdivisions apply to the IVS scheme as provided in this section in addition to any other application they have to the scheme.

727‑910  Treatment of value shifted under the direct value shift
 (1) The first entity is treated as *providing economic benefits to the other entity, *in connection with the IVS scheme, at the time of a decrease (or future decrease) in the *market value of any of the *down interests, to the extent that the decrease is (or will be) covered by subsection 725‑155(1).
 (2) Despite subsections 727‑150(4) and 727‑855(2) and (3), the *market value of all economic benefits that subsection (1) of this section treats the first entity as providing to the other entity:
 (a) is to be determined as at the time immediately before the *IVS time, or immediately before the *realisation event, as appropriate; and
 (b) is equal to the total value shifted from the *down interests to the *up interests, as worked out under one or more applications of step 2 of the method statement in section 725‑365 or 725‑380.
 (3) The 2 entities are treated as not dealing with each other at *arm's length in relation to the providing of those benefits.
 (4)