Where allowances on an asset are calculated individually, that is where there is no pooling; the owner of an asset could create a balancing allowance by selling an asset to a connected person for a nominal amount. There is legislation that prevents this. It treats a sale of property not at market value as being at market value where:
•the control test is met, or
•the tax advantage test is met.
The legislation applies to BPRAs, MEA and RDAs. It is sometimes subject to an election by the parties to the transaction for a lower amount CA13200.
The control test is met where
•the buyer is a body of persons that the seller controls CA11650,
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