Document ID: chunk:federal_register_of_legislation:C2025C00029:section:6:p22
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 6 (pt 22/22)
Character Range: 6996645–6997884

royalties by the entity would be greater.

Absence of condition
 (2) For the purposes of subsection (1), there is taken to be a difference between the actual conditions and the *arm's length conditions if:
 (a) an actual condition exists that is not one of the arm's length conditions; or
 (b) a condition does not exist in the actual conditions but is one of the arm's length conditions.

Cross‑border test
 (3) Conditions that operate between an entity and another entity in connection with their commercial or financial relations satisfy the cross‑border test if:
 (a) the conditions meet the overseas requirement in the following table for either or both of the entities; or
 (b) the conditions operate in connection with a *business that the entity carries on in an *area covered by an international tax sharing treaty.

Overseas requirement
Item                  Column 1                                                                                                                                                                Column 2
                      The conditions meet the overseas requirement for this type of entity:                                                                                                   if: