Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-5 - CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS  

Division 165 - Income tax consequences of changing ownership or control of a company  

Subdivision 165-CC - Change of ownership or control of company that has an unrealised net loss  

Operative provisions

SECTION 165-115B   What happens when the company makes a capital loss or becomes entitled to a deduction in respect of a CGT asset after a changeover time  

Where capital loss or deduction is equal to or less than residual unrealised net loss

165-115B(1)    

If the *capital loss or deduction referred to in subparagraph 165-115A(1)(c) (i) is equal to or less than the company ' s residual unrealised net loss at the time of the occurrence of the event that resulted in the capital loss or entitled the company to the deduction:

(a) the capital loss is taken to have been a *net capital loss; or

(b) the deduction is taken to have been a *tax loss;

of the company for the income year immediately before the income year in which the changeover time occurred.

Where capital loss or deduction is greater than residual unrealised net loss

165-115B(2)    

If the *capital loss or deduction referred to in subparagraph 165-115A(1)(c)(i) is greater than the company ' s residual unrealised net loss at the time of the occurrence of the event that resulted in the capital loss or entitled the company to the deduction:

(a) the part of the capital loss that is equal to the residual unrealised net loss is taken to have been a *net capital loss; or

(b) the part of the deduction that is equal to the residual unrealised net loss is taken to have been a *tax loss;

of the company for the income year immediately before the income year in which the changeover time occurred.

Company does not meet certain conditions in relation to net capital loss or tax loss

165-115B(3)    

The company is taken not to have met, at the changeover time, the conditions in subsections 165-12(2) , (3) and (4) in relation to the *net capital loss or the *tax loss. The changeover time is the test time for applying section 165-13 to the company.

Need to meet business continuity test

165-115B(4)    

The effect of subsection (3) is that the company cannot apply the *net capital loss (see section 165-10 as it applies because of section 165-96 ), or deduct the *tax loss (see section 165-10 ), unless it meets the condition in section 165-13 (the business continuity test).

Consequences for net capital loss

165-115B(5)    

The *net capital loss cannot be applied against *capital gains made in an income year before the income year in which the company made the capital loss referred to in subparagraph 165-115A(1)(c)(i) .

Consequences for tax loss

165-115B(6)    

The *tax loss cannot be deducted from assessable income *derived in an income year before the income year in which the company would have been entitled to the deduction referred to in subparagraph 165-115A(1)(c)(i) .

Note:

For changeover time see sections 165-115C and 165-115D .

165-115B(7)    
(Repealed by No 89 of 2000)

165-115B(8)    
(Repealed by No 89 of 2000)