ATO Interpretative Decision
ATO ID 2003/23
Company tax
Group company loss transfers: transfer of parts of a tax loss to multiple companiesFOI status: may be released
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Can a loss company with a surplus tax loss, transfer parts of that loss to more than one income company within the same wholly-owned group under Subdivision 170-A of the Income Tax Assessment Act 1997 (ITAA 1997) where the conditions for transfer in the Subdivision are otherwise satisfied?
Decision
Yes. Subdivision 170-A of the ITAA 1997 allows a loss company to transfer parts of a tax loss to more than one income company within the same wholly-owned group to the extent of the total amount of loss available for transfer and where the conditions for transfer in the Subdivision are otherwise satisfied.
Facts
Company L (the 'loss company') has a surplus tax loss which was incurred in an income year commencing after 30 June 1998.
Three related companies (the 'income companies') have derived assessable income in a later income year.
All four companies are resident companies and have been members of the same wholly-owned group of companies since before 1 July 1998. None of the four companies are prescribed dual resident companies.
Reasons for Decision
Subsection 170-10(1) of the ITAA 1997 operates to allow a loss company to transfer an amount of its tax loss to an income company within the same wholly-owned group where conditions for transfer in Subdivision 170-A are satisfied. Subsection 170-10(2) provides a level of flexibility such that the amount transferred can be the whole or part of the tax loss. The Commissioner affirms in Taxation Ruling TR 1998/12 that different parts of a loss may be transferred to a number of income companies within a group, to the extent of the total amount of loss available for transfer.
Accordingly, if the conditions of Subdivision 170-A of the ITAA 1997 are met, the loss company can transfer parts of its tax loss to the three income companies in respect of the later income year to the extent of the total amount of loss available for transfer.
Date of decision: 13 November 2002Year of income: Year ended 30 June 2002
Legislative References:
Income Tax Assessment Act 1997
Subdivision 170-A
subsection 170-10(1)
subsection 170-10(2)
Related Public Rulings (including Determinations)
Taxation Ruling TR 98/12
ATO ID 2003/18
ATO ID 2003/19
ATO ID 2003/21
ATO ID 2003/22
Keywords
Group company loss transfers
ISSN: 1445-2782