Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 709 - Other rules applying when entities become subsidiary members etc.  

Subdivision 709-D - Deducting bad debts  

Extension of Subdivision to debt/equity swap loss

SECTION 709-220   Limit on deduction of swap loss  

Object

709-220(1)    
The object of this section is to limit the circumstances in which an entity can deduct a swap loss (as defined in section 63E of the Income Tax Assessment Act 1936 ) resulting from a debt/equity swap (as defined in that section) to circumstances similar to those in which this Subdivision lets an entity deduct a debt it writes off as bad.

Modified operation of sections 709-205, 709-210 and 709-215

709-220(2)    
Sections 709-205 , 709-210 and 709-215 (except subsection 709-215(2) ) apply in relation to the extinction (however described) of a debt as part of a debt/equity swap in the same way as they apply in relation to the writing off of a debt as bad.

709-220(3)    
Subsection 709-215(1) :

(a) applies in relation to a swap loss from a debt/equity swap in the same way as it applies in relation to a debt, or part of a debt; and

(b) applies as if paragraph 709-215(1)(a) referred to subsection 63E(3) of the Income Tax Assessment Act 1936 instead of sections 8-1 and 25-35 .

709-220(4)    
This section has effect despite subsection 63E(5) of the Income Tax Assessment Act 1936 .