Commonwealth Consolidated Acts

[Index] [Table] [Search] [Search this Act] [Notes] [Noteup] [Previous] [Next] [Download] [Help]

INCOME TAX ASSESSMENT ACT 1997 - SECT 170.210

Transfer of tax loss: direct and indirect interests in the loss company

             (1)  If:

                     (a)  an amount of a * tax loss is transferred by a company to another company; and

                     (b)  Subdivision 170-A applies in respect of the transfer; and

                     (c)  a company (the group company ) holds a * share in the loss company or is owed a debt by the loss company in respect of a loan; and

                     (d)  the group company * acquired the share or debt on or after 20 September 1985; and

                     (e)  throughout the deduction year, the group company is a member of the same * wholly-owned group as the loss company (disregarding a period when either was not in existence); and

                      (f)  a * CGT event happens in relation to the share or debt on or after the commencement of this section; and

                     (g)  the relevant agreement referred to in section 170-50 is made on or after that commencement;

the * cost base and * reduced cost base of the share or the reduced cost base of the debt is reduced in accordance with subsection (3).

             (2)  If:

                     (a)  an amount of a * tax loss is transferred by a company to another company; and

                     (b)  Subdivision 170-A applies in respect of the transfer; and

                     (c)  a company (the group company ) holds a * share in another company or is owed a debt by another company in respect of a loan; and

                     (d)  the group company * acquired the share or debt on or after 20 September 1985; and

                     (e)  the money that the group company paid for the share, or the borrowed money, has been applied (directly, or indirectly through one or more interposed entities):

                              (i)  in the other company or a third company acquiring shares in the loss company; or

                             (ii)  in a * borrowing by the loss company from the other company or from a third company; and

                      (f)  throughout the deduction year, the group company, the other company and the third company (if any) are all members of the same * wholly-owned group as the loss company (disregarding, for a particular company, a period when it was not in existence); and

                     (g)  a * CGT event happens in relation to the share or debt on or after the commencement of this section; and

                     (h)  the relevant agreement referred to in section 170-50 is made on or after that commencement;

the * cost base and * reduced cost base of the share or the reduced cost base of the debt is reduced in accordance with subsection (3).

             (3)  The * cost base and * reduced cost base of the share or the reduced cost base of the debt is reduced by an amount that is appropriate having regard to:

                    (aa)  the main object of this Subdivision and other matters mentioned in subsections 170-205(1) and (2); and

                     (a)  the group company's direct or indirect interest in the loss company; and

                   (ba)  any reduction in the reduced cost base made under Subdivision 165-CD; and

                     (b)  the amount of the loss transferred; and

                     (c)  the extent to which the loss reduced the * market value of the share or debt; and

                     (d)  any consideration received by the loss company for the loss transferred; and

                     (e)  whether, because of a dividend or dividends paid by the loss company, the consideration is no longer reflected (wholly or partly) in the market value of the share or debt when a * CGT event happens in relation to it.

          (3A)  To avoid doubt in applying paragraph (3)(c) in relation to a * share or debt, if factors other than the loss altered the * market value of the share or debt, the extent to which the loss reduced that market value is taken to be the extent to which that market value would have been reduced apart from those other factors.

Note:          An example of a factor other than the loss is the unrealised value of assets (including assets in respect of which there is an unrealised gain) of the loss company, whether or not generated by outlays or economic losses reflected in the loss for income tax purposes.

          (3B)  This section applies to a * tax loss only to the extent that the loss represents an outlay or loss of any of the economic resources of the * loss company.

Note:          Where the income tax law allows, as all or part of a loss, an amount for the decline in value of a depreciating asset that exceeds the actual economic depreciation or depletion of the asset concerned, the excess is not to be regarded for the purposes of this subsection as representing an outlay or loss of economic resources of the company.

             (4)  Any reduction is to be made immediately before a * CGT event happens in relation to the share or debt and is to have effect from that time or the end of the deduction year, whichever is the earlier.

Note 1:       For deduction year see subsection 170-20(1).

Note 2:       Subsection (4) is relevant for indexing elements of a cost base (see sections 114-1 and 114-15).



AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback