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 165-115BA   What happens when a CGT event happens after a changeover time to a CGT asset of the company that is trading stock  

Application

165-115BA(1)    
This section applies to the company if, after the changeover time, the company makes a *trading stock loss in respect of an item of *trading stock as mentioned in subparagraph 165-115A(1)(c)(ii) .

Where trading stock loss is equal to or less than residual unrealised net loss

165-115BA(2)    
If the *trading stock loss is equal to or less than the company ' s residual unrealised net loss at the time of the occurrence of the trading stock loss, the amount of the trading stock loss is to be included in the company ' s assessable income.

Where trading stock loss is greater than unrealised net loss

165-115BA(3)    
If the *trading stock loss is greater than the company ' s residual unrealised net loss at the time of the occurrence of the trading stock loss, the part of the trading stock loss that is equal to the residual unrealised net loss is to be included in the company ' s assessable income.

No increase in assessable income if company satisfies the business continuity test

165-115BA(4)    

Neither subsection (2) nor (3) applies to the company if the company meets the condition in section 165-13 (the business continuity test).

Assumptions for purposes of business continuity test

165-115BA(5)    
In determining whether the company meets the condition in section 165-13 , assume:

(a) that the *trading stock loss (if subsection (2) applies) or the part of the trading stock loss (if subsection (3) applies) is a *net capital loss of the company for the income year immediately before the income year in which the changeover time occurred; and

(b) that the company failed, at the changeover time, to meet the condition in subsections 165-12(2) , (3) and (4) in relation to the net capital loss referred to in paragraph (a); and

(c) that the changeover time is the test time ; and

(d) that the *business continuity test period is the income year in which the loss occurred.