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INCOME TAX ASSESSMENT ACT 1997 - SECT 165.132

When tax losses resulting from bad debts cannot be deducted

  (1)   If:

  (a)   a company can deduct a debt (or part of a debt) that it wrote off as bad in an income year; and

  (b)   because the company failed to meet a condition in section   165 - 123 (about the company maintaining the same owners), it could not have deducted the debt (or part) apart from section   165 - 126 (about the company satisfying the business continuity test); and

  (c)   the company wrote off the debt after the * test time worked out under section   165 - 126; and

  (d)   because of the deduction, the company has a * tax loss for that income year, or there was an increase in the amount of its * tax loss for that income year; and

  (e)   the company carried on a * business during that income year for the purpose, or for purposes including the purpose, of securing a deduction for the debt (or part) by relying on section   165 - 126;

the company cannot deduct the * tax loss for a later income year, or cannot deduct it to the extent of the increase, unless it also satisfies the * business continuity test for the later income year (the business continuity test period ).

  (2)   Apply the test to the * business that the company carried on immediately before the * test time worked out for section   165 - 126.

For the business continuity test: see Subdivision   165 - E.

Table of sections

The primary and alternative tests

165 - 150   Who has more than 50% of the voting power in the company

165 - 155   Who has rights to more than 50% of the company's dividends

165 - 160   Who has rights to more than 50% of the company's capital distributions

165 - 165   Rules about tests for a condition or occurrence of a circumstance

165 - 175   Tests can be satisfied by a single person

Rules affecting the operation of the tests

165 - 180   Arrangements affecting beneficial ownership of shares

165 - 185   Shares treated as not having carried rights

165 - 190   Shares treated as always having carried rights

165 - 200   Rules do not affect totals of shares, units in unit trusts or rights carried by shares and units

165 - 202   Shares held by government entities and charities etc.

165 - 203   Companies where no shares have been issued

165 - 205   Death of share owner

165 - 207   Trustees of family trusts

165 - 208   Companies in liquidation etc.

165 - 209   Dual listed companies



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