Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) The consequences of the * direct value shift for your * trading stock are of one or more of these 3 kinds:
(a) the * adjustable values of * down interests of which you are an * affected owner are reduced (see subsection (2));
(b) the adjustable values of * up interests of which you are an affected owner are uplifted (see subsection (3));
(c) there are one or more * taxing events generating a gain for down interests of which you are an affected owner (see subsection (5)).
Effect of reduction or uplift of adjustable value
(2) If the * adjustable value of a * down interest that is your * trading stock is reduced under section 725 - 335, you are treated as if:
(a) * immediately before the * decrease time, you had sold the interest to someone else (at * arm's length and in the ordinary course of business) for its * adjustable value immediately before the decrease time; and
(b) immediately after the decrease time, you had bought the interest back for the reduced adjustable value.
(3) If the * adjustable value of an * up interest that is your * trading stock is uplifted under section 725 - 335, you are treated as if:
(a) * immediately before the * increase time, you had sold the interest to someone else (at * arm's length and in the ordinary course of business) for its * adjustable value immediately before the increase time; and
(b) immediately after the increase time, you had bought the interest back for the uplifted adjustable value.
(4) However, the increase in the cost of an * up interest because of paragraph (3)(b) is taken into account from time to time only to the extent that the amount of the increase is still reflected in the * market value of the interest.
Note: The situations where the increase in cost would be taken into account include:
• in working out your deductions for the cost of trading stock acquired during the income year in which the increase time happens; and
• the end of an income year if the interest's closing value as trading stock is worked out on the basis of its cost; and
• the start of the income year in which the interest is disposed of, if that happens in a later income year and the interest's closing value as trading stock at the end of the previous income year was worked out on the basis of its cost.
If the interest stops being trading stock, section 70 - 110 treats you as having disposed of it.
Taxing event generating a gain
(5) For each * taxing event generating a gain under an item in the table in subsection 725 - 335(3), the gain is included in your assessable income for the income year in which the * decrease time happens.