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INCOME TAX ASSESSMENT ACT 1997 - SECT 417.90

Tax losses from transitioned petroleum activities

Transferring tax losses attributable to activities undertaken before the Timor Sea Maritime Boundaries Treaty entered into force

             (1)  If:

                     (a)  you have a * tax loss for the income year in which the * Timor Sea Maritime Boundaries Treaty entered into force, or for an earlier income year; and

                     (b)  some or all of the tax loss is attributable to you undertaking * transitioned petroleum activities before that treaty entered into force;

you may, for that income year or a later income year, choose to transfer all or any part of the amount of the tax loss that is so attributable to a * corporate tax entity (the transferee ) that is your * associate and either is an Australian resident or has a * permanent establishment in Australia.

Transferring or applying other tax losses

             (2)  If:

                     (a)  you have a * tax loss for an income year (the loss year ); and

                     (b)  some or all of the tax loss is attributable to you undertaking * transitioned petroleum activities; and

                     (c)  paragraph (1)(b) does not apply to those activities;

you may, for that income year or a later income year:

                     (d)  choose to transfer all or any part of the amount of the tax loss that is so attributable to a * corporate tax entity (the transferee ) that either is an Australian resident or has a * permanent establishment in Australia; or

                     (e)  choose to apply all or any part of the amount of the tax loss that is so attributable as a deduction from your assessable income for any of the 4 income years preceding the income year for which you make the choice.

             (3)  However:

                     (a)  the total amount chosen to be transferred or applied under subsection (2) for an income year must not exceed 10% of the total amount:

                              (i)  on which your liability for * foreign income tax under the law of Timor-Leste is required to be worked out; and

                             (ii)  that relates to undertaking those * transitioned petroleum activities during that year; and

                     (b)  you cannot make a choice under paragraph (2)(e) for an income year if you do not have a * franking surplus at the end of that year; and

                     (c)  the total amount chosen to be applied under paragraph (2)(e) for an income year must not exceed the sum of:

                              (i)  the amount of your franking surplus at the end of that year; and

                             (ii)  the product of the amount of that surplus and the * corporate tax gross-up rate.

             (4)  In working out for the purposes of paragraph (3)(a) the total amount chosen to be transferred or applied under subsection (2) for an income year, disregard:

                     (a)  any part of the * tax loss attributable to deductions for assets allocated to a project pool under section 417- 35; and

                     (b)  any part of the * tax loss attributable to deductions for assets allocated to a project pool under Subdivision 40-I, to the extent that the deductions relate to * project amounts to which subsection 417-45(1) or (2) applies.

             (5)  In working out for the purposes of paragraph (3)(a) the total amount on which your liability for * foreign income tax under the law of Timor-Leste is required to be worked out, disregard the amounts of any deductions for tax paid under the law of Timor-Leste.

             (6)  Paragraphs (3)(b) and (c) do not apply if you were a foreign resident (other than a * NZ franking company) for more than half of the income year for which the choice was made.



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