5. What happens if you sell assets or create rights for less than market value?Value shifts change the relationship between the market value and tax value of an asset that would usually give rise to a capital gains tax liability. Most value shifts happen when parties do not deal at the market value, causing one more assets to decrease while the other assets value increases. Value shifts occur in the form of:
Without a value-shifting regime in place there can be artificial losses and deferred gains. Where the value shifting legislation applies, you may need to adjust the tax values of an interest affected by the value shift, or adjust a realised loss or gain. In some cases there may be an immediate capital gain. In general, the value shifting rules do not apply to small value shifts that fall within the de minimis rules. |
