Value shifts change the relationship between the market value and tax value of an asset. Most value shifts happen when parties don’t deal at the market value, causing one asset to decrease while the other increases. Value shifts occur in the form of:

• Indirect value shifting
• Direct value shifts on interests
• Direct value shifts by creating rights

Without a value-shifting regime in place there can be artificial losses and deferred gains. Where the General Value Shifting Regime (GVSR) 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 GVSR does not apply to small value shifts or dealings within consolidated groups.