Commonwealth Consolidated Acts

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INCOME TAX ASSESSMENT ACT 1997 - SECT 175.70

Someone else obtains a tax benefit because of capital loss or gain available to company

             (1)  The Commissioner may * disallow a * capital loss of a company if:

                     (a)  a person (other than the company) has obtained or will obtain a tax benefit in connection with a * scheme; and

                     (b)  the scheme would not have been entered into or carried out if the company had not made some or all (the available capital loss ) of the capital loss.

However, the capital loss may be disallowed only to the extent of the available capital loss.

             (2)  The Commissioner may * disallow * capital losses of a company (or parts of them) if:

                     (a)  a person has obtained or will obtain a tax benefit in connection with a * scheme; and

                     (b)  the scheme would not have been entered into or carried out if the company had not made some or all (the available capital gains ) of the * capital gains it made:

                              (i)  before it made the capital losses; and

                             (ii)  in the same income year as it made them.

The disallowed capital losses and parts of capital losses may exceed the amount of the available capital gains.

Note:          The disallowance may result in a tax loss for the income year: see section 175-75.

             (3)  An expression means the same in this section as in Part IVA of the Income Tax Assessment Act 1936 .

             (4)  The Commissioner cannot * disallow under this section if:

                     (a)  the person who has obtained or will obtain the tax benefit had a * shareholding interest in the company at some time during the income year; and

                     (b)  the Commissioner considers the tax benefit to be fair and reasonable having regard to that shareholding interest.

Note:          Section 175-100 allows the Commissioner to disallow the whole or part of any capital losses of an insolvent company.



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