Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 170.205

Interests in the loss company

  (1)   The main object of this Subdivision is to ensure that, if an amount of a * tax loss or * net capital loss is transferred by a company to another company in the same * wholly - owned group, the loss transferred is not duplicated by a member of the group.

  (2)   Duplication could occur by the making of a * capital loss, or the reduction of a * capital gain, from a * CGT event that happens in relation to an equity interest held (directly or indirectly) in the loss company or by the making of a capital loss in relation to a debt interest held (directly or indirectly) in the loss company.

Interests in the income company or gain company

  (3)   This Subdivision may also require an adjustment to the cost base and reduced cost base of an equity or debt interest held (directly or indirectly) by a group company in the income company or gain company.

  (4)   This adjustment is to reflect an increase in the * market value of the interest because of the transfer of the loss if the increase is still reflected in the market value of the interest when a * CGT event happens in relation to the interest.