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INCOME TAX ASSESSMENT ACT 1997 - SECT 725.365

Decreases in adjustable values of down interests (with pre - shift gains), and taxing events generating a gain

    Use the following method statement:

  (a)   to work out the amount of the gain for a * taxing event generating a gain under:

  (i)   section   725 - 245; or

  (ii)   item   2, 4 or 7 of the table in subsection   725 - 335(3); and

  (b)   to work out the decrease in * adjustable value of a * down interest under:

  (i)   item   1, 2, 3, 4 or 6 of the table in subsection   725 - 250(2); or

  (ii)   item   1, 2, 4 or 7 of the table in subsection   725 - 335(3).

Method statement

Step 1.   Group together all * down interests that:

  (a)   are of the kind referred to in the relevant item; and

  (b)   immediately before the * decrease time, had the same * adjustable value as the down interest; and

  (c)   immediately before that time had the same * market value as the down interest; and

  (d)   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 following formula:

  Start formula Sum of the decreases in *market value of all *down interests in the group because of the *direct value shift times start fraction Sum of the increases in *market value of, and *discounts on the issue of, those *up interests because of the *direct value shift over Sum of the increases in *market value of, and *discounts given on the issue of, all *up interests because of the *direct value shift end fraction end formula

Step 3.   Work out the notional adjustable value of the value shifted from that group of * down interests to those * up interests using the formula:

  Start formula Sum of the *adjustable values immediately before the *decrease time, of all *down interests in the group times start fraction Value shifted over Sum of the *market values, immediately before the *decrease time, of all *down interests in the group end fraction end formula

Step 4.   The decrease in the * adjustable value of the * down interest under the relevant item is equal to:

  Start formula start fraction Notional adjustable value over Number of *down interests in the group end fraction end formula

Step 5.   For a * taxing event generating a gain under the relevant item, the amount of the gain is equal to:

Start formula start fraction Value shifted minus Notional adjustable value over Number of *down interests in the group end fraction end formula



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