Commonwealth Consolidated Acts

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INCOME TAX ASSESSMENT ACT 1997 - SECT 713.540

Losses of entities whose membership interests are segregated exempt assets of life insurance company

             (1)  This section applies if:

                     (a)  a * life insurance company becomes a * member of a * consolidated group at a time (the joining time ); and

                     (b)  at the joining time, the life insurance company owns, either directly or indirectly through one or more interposed entities, all the * membership interests in yet another entity (the life insurance subsidiary ) that becomes a * subsidiary member of the group at that time; and

                     (c)  all the following membership interests are * segregated exempt assets of the life insurance company:

                              (i)  the membership interests (if any) that the life insurance company owns directly in the life insurance subsidiary;

                             (ii)  the membership interests (if any) that the life insurance company owns directly in the interposed entities.

             (2)  A * tax loss or * net capital loss of the life insurance subsidiary for an income year ending before the joining time cannot be * utilised by the life insurance subsidiary for an income year ending after that time.

Note:          This prevents the loss from being transferred to the head company of the consolidated group under Subdivision 707-A (because it means the life insurance subsidiary could not have utilised the loss for the trial year). As a result, section 707-150 prevents any other entity from utilising the loss for an income year ending after the joining time.

Imputation rules for life insurance companies joining consolidated group



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