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Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-5 - RULES ABOUT DEDUCTIBILITY OF PARTICULAR KINDS OF AMOUNTS  

Division 36 - Tax losses of earlier income years  

Subdivision 36-A - Deductions for tax losses of earlier income years  

SECTION 36-25  

36-25   Special rules about tax losses  

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Tax losses of individuals


Item For the special rules about this situation … See:
1. You go bankrupt, or you are released from debts under a bankruptcy law: your right to deduct tax losses of an earlier income year may be affected. Subdivision 36-B

Tax losses of companies


Item For the special rules about this situation … See:
1. A company has had a change of ownership or control during the income year, and has not satisfied the business continuity test: it works out its taxable income and its tax loss in a special way. Subdivision 165-B
2. A company wants to deduct a tax loss. It cannot do so unless: Subdivision 165-A
  • the same people owned the company during the loss year, the income year and any intervening year; and  
  • no person controlled the company ' s voting power at any time during the income year who did not also control it during the whole of the loss year and any intervening year;  
  or the company has satisfied the business continuity test.  
3. One or more of these things happen: Division 175
  • income is injected into a company;  
  • a tax benefit is obtained from available losses or deductions;  
  • a deduction is injected into a company;  
  • a tax benefit is obtained because of available income.  
  The Commissioner can disallow tax losses or current year deductions.  
4. A company can transfer a surplus amount of its tax loss to another company so that the other company can deduct the amount in the income year of the transfer. (Both companies must be members of the same wholly-owned group.) Subdivision 170-A
  See also: Tax losses of pooled development funds (PDFs) below
5. A life insurance company Subdivision 320-D
6. A company is a designated infrastructure project entity. Subdivision 415-B

Tax losses of corporate tax entities


Item For the special rules about this situation … See:
1. A corporate tax entity that has an amount of excess franking offsets for an income year: it works out its tax loss in a special way. Subdivision 36-C
  See also Division 160 (loss carry back tax offset for 2020-21, 2021-22 or 2022-23 for businesses with turnover under $5 billion)  

Tax losses of entities generally


Item For the special rules about this situation … See:
1. (Repealed by No 143 of 2007 )  
2. (Repealed by No 143 of 2007 )  
3. You have deductions in relation to deriving income under section 26AG of the Income Tax Assessment Act 1936 from the proceeds of a film: your tax loss may have a film component, which is deductible from your film income only. Former Subdivision 375-G

Tax losses of pooled development funds (PDFs)


Item For the special rules about this situation … See:
1. A company is a pooled development fund (PDF) at the end of an income year for which it has a tax loss: it can only:
(a) deduct the loss while it is a PDF; or
(b) carry back the loss to an income year in which it was a PDF.		 Sections 195-5 and 195-37
2. A company becomes a PDF during an income year: special rules affect how it works out a tax loss and how the loss is utilised. Section 195-15

Tax losses of VCLPs, ESVCLPs, AFOFs and VCMPs


Item For the special rules about this situation … See:
1. A limited partnership that has a tax loss becomes a VCLP, an ESVCLP, an AFOF or a VCMP: it cannot:
(a) deduct the loss while it is a VCLP, an ESVCLP, an AFOF or a VCMP; or
(b) carry back the loss to an income year in which it was not a VCLP, an ESVCLP, an AFOF or a VCMP.		 Subdivision 195-B

Tax losses of entities that become foreign hybrids


Item For the special rules about this situation … See:
1. An entity that has a tax loss becomes a foreign hybrid: it cannot deduct the loss while it is a foreign hybrid. Section 830-115

Tax losses of trusts


Item For the special rules about this subsection … See:
1. A trust has had a change of ownership or control or there has been an abnormal trading in its units: Divisions 266 , 267 and 268 in Schedule 2F to the Income Tax Assessment Act 1936
  • if this happens in the income year, it works out its net income and tax loss in a special way; or  
  • if this happens at any time from the start of a loss year until the end of the income year, it cannot deduct a tax loss from the loss year.  
  This will not be the case if the trust is an excepted trust. However, if it became one by making a family trust election, a special tax may be payable on certain distributions and other amounts.  
2. A trust is involved in a scheme to take advantage of deductions. The trust may be prevented from making full use of them. Division 270 in Schedule 2F to the Income Tax Assessment Act 1936
3. A trust is a designated infrastructure project entity. Subdivision 415-B

Tax losses of greenfields minerals explorers


Item For the special rules about this situation … See:
1. A greenfields minerals explorer creates exploration credits. Section 418-95

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