Commonwealth Consolidated Acts

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INCOME TAX ASSESSMENT ACT 1997 - SECT 727.720

Abnormal service arrangement reduces value of losing entity that is not a group service provider by at least $500,000

  (1)   It must be the case that at no time during the period when the owner owned the interest did the sole or dominant activity of the * losing entity consist of providing services as mentioned in subsection   727 - 715(1).

  (2)   It must be reasonable to conclude that the total (the total market value ) of the * market values, immediately before the * realisation event, of * primary interests in the * losing entity then owned by * affected owners is less than it would have been if none of the following had happened:

  (a)   the * 95% services indirect value shift;

  (b)   each * predominantly - services indirect value shift that meets either of these conditions:

  (i)   its amount was less than $500,000 and it happened within 4 years before the realisation event, or at the same time as the realisation event;

  (ii)   its amount was $500,000 or more and it happened at any time before the realisation event, or at the same time as the realisation event;

    and that meets all of these conditions:

  (iii)   the same entity is the losing entity for it as for the 95% services indirect value shift;

  (iv)   it happened under a different * scheme from the 95% services indirect value shift; and

  (v)   having regard to all relevant circumstances, it is reasonable to conclude that the sole or main reason why it happened under a different scheme was to prevent the conditions in section   727 - 705, 727 - 710, 727 - 715 or this section from being met.

  (3)   It must also be reasonable to conclude that the total * market value is less than it would have been by at least:

  (a)   $500,000, if the total of the * adjustable values, immediately before the * realisation event, of the * primary interests referred to in subsection   (2) is less than or equal to $10,000,000; or

  (b)   5% of the total of those * adjustable values, if that total is greater than $10,000,000 and less than or equal to $100,000,000; or

  (c)   $5,000,000, if that total is greater than $100,000,000.

  (4)   The providing of the services mentioned in paragraph   727 - 700(2)(a) or (b) by the losing entity must not be in the ordinary course of its business.


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