New Business Tax System (Consolidation, Value Shifting, Demergers and Other Measures) Act 2002 (90 of 2002)

Schedule 14   Loss integrity rules: global method of valuing assets

Part 1   Income Tax Assessment Act 1997

1   Section 165-115

Repeal the section, substitute:

165-115 What this Subdivision is about

If a change occurs in the ownership or control of a company that has an unrealised net loss, the company cannot, to the extent of the unrealised net loss, have capital losses taken into account, or deduct revenue losses, in respect of CGT events that happen to CGT assets that it owned at the time of the change, unless it satisfies the same business test.

165-115AA Special rules to save compliance costs

(1) A company is exempt from these rules if, at the time of the change in ownership or control, it (together with certain related entities) has a net asset value of not more than $5,000,000 under the test in section 152-15 (for small business CGT relief).

(2) In working out whether it has an unrealised net loss, a company can choose to work out the market value of each of its assets individually, or of all of its assets together.

(3) If a company works out the market value of each of its assets individually, it may choose to exclude every asset that it acquired for less than $10,000, in which case:

(a) unrealised losses and gains on the excluded assets will not be taken into account in calculating the company's unrealised net loss; and

(b) losses on the excluded assets will be allowed without the company being subject to the same business test.