Income Tax Assessment Act 1997
CHAPTER 3
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SPECIALIST LIABILITY RULES
PART 3-90
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CONSOLIDATED GROUPS
Division 707
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Losses for head companies when entities become members etc.
Subdivision 707-C
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Amount of transferred losses that can be utilised
How much of a transferred loss can be utilised?
SECTION 707-310 How much of a transferred loss can be utilised? 707-310(1)
This section limits the amount of losses in a particular * bundle of losses transferred under Subdivision 707-A that can be * utilised by the transferee. The limit is set by reference to the * available fraction for the bundle.
Basic rule
707-310(2)
The transferee cannot * utilise more of the losses in the * bundle than the transferee would have been able to utilise (apart from this section) under the conditions in subsections (3), (4) and (5).
707-310(3)
The first condition is that the only amount of the transferee ' s *ordinary income, *statutory income or gains (if any) of a kind described in column 1 of an item of the table for the income year is the * available fraction of the amount worked out as described in column 2 of the item having regard to:
(a) the transferee ' s *ordinary income, *statutory income or gains for the income year apart from this section; and
(b) the transferee ' s deductions for the income year and losses, except losses transferred to the transferee under Subdivision 707-A .
707-310(3A)
For the purposes of subsection (3):
(a) the transferee ' s * tax losses to which paragraph (b) of, or the table in, that subsection applies are to be worked out on the assumption that the transferee chooses to deduct under subsection 36-17(2) all of the tax losses and that subsection 36-17(5) does not apply to that choice; and
(b) except as mentioned in paragraph (a) of this subsection, amounts worked out as described in column 2 of an item of the table in subsection (3) are to be worked out making the same choices as the transferee actually makes in working out its taxable income as stated in its * income tax return for the income year; and
(c) the transferee ' s grossed-up franking offset amount mentioned in column 2 of item 6 in the table is the amount worked out using the formula:
where:
707-310(4)
The second condition is that once the amounts of the transferee ' s income or gains have been worked out under subsection (3) they are not reduced by:
(a) deductions, or losses, other than losses in the * bundle; or
(b) taxes or expenses described in subsection 375-805(4) (which is about * net exempt film income).(a) the transferee
'
s net exempt film income will be the same as its exempt film income worked out under subsection (3); and
(b) the transferee
'
s net assessable film income will be the same as its assessable film income worked out under subsection (3).
707-310(5)
The third condition is that once the amounts of the transferee ' s * exempt income have been worked out under subsection (3), assume that the transferee had no losses, outgoings or taxes described in subsection 36-20(1) (which is about * net exempt income), in working out how much of a * tax loss in the * bundle can be deducted from the transferee ' s net exempt income.
View history note
Hide history noteSECTION 707-310 How much of a transferred loss can be utilised? 707-310(1)
This section limits the amount of losses in a particular * bundle of losses transferred under Subdivision 707-A that can be * utilised by the transferee. The limit is set by reference to the * available fraction for the bundle.
Note:
Section 707-335 of this Act and section 707-350 of the Income Tax (Transitional Provisions) Act 1997 set different limits on utilising losses in a bundle of losses in certain circumstances.
Basic rule
707-310(2)
The transferee cannot * utilise more of the losses in the * bundle than the transferee would have been able to utilise (apart from this section) under the conditions in subsections (3), (4) and (5).
707-310(3)
The first condition is that the only amount of the transferee ' s *ordinary income, *statutory income or gains (if any) of a kind described in column 1 of an item of the table for the income year is the * available fraction of the amount worked out as described in column 2 of the item having regard to:
(a) the transferee ' s *ordinary income, *statutory income or gains for the income year apart from this section; and
(b) the transferee ' s deductions for the income year and losses, except losses transferred to the transferee under Subdivision 707-A .
| Income and gains | ||
| Column 1 | Column 2 | |
| The transferee ' s ordinary income, statutory income or gains of this kind: | Are worked out by reference to this amount: | |
| 1 | *Capital gains | The result of:
(a) step 2 of the method statement in subsection 102-5(1); or (b) step 3 of the method statement in section 165-111; (as appropriate) for the transferee and the income year |
| 2 | (Repealed by No 143 of 2007 ) | |
| 3 | *Exempt film income | The transferee ' s *net exempt film income for the income year remaining after deduction of the transferee ' s *film losses (if any) |
| 4 | *Assessable film income | The transferee ' s *net assessable film income for the income year remaining after deduction of the transferee ' s *film losses (if any) |
| 5 | *Exempt income other than *exempt film income | The amount of the transferee ' s *net exempt income for the income year that would have remained after deducting from it the transferee ' s *tax losses (if any), assuming the amount of that income were what it would have been had the transferee not had *exempt film income for the year |
| 6 | Assessable income that is not attributable to *capital gains and is not *assessable film income | The amount (if any) that would have been the transferee
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s taxable income (if any) for the income year if the transferee had
not
had for the income year:
(a) any *net capital gain; or (b) any *net assessable film income; reduced by the amount (the transferee ' s grossed-up franking offset amount ) worked out in accordance with paragraph (3A)(c) |
707-310(3A)
For the purposes of subsection (3):
(a) the transferee ' s * tax losses to which paragraph (b) of, or the table in, that subsection applies are to be worked out on the assumption that the transferee chooses to deduct under subsection 36-17(2) all of the tax losses and that subsection 36-17(5) does not apply to that choice; and
(b) except as mentioned in paragraph (a) of this subsection, amounts worked out as described in column 2 of an item of the table in subsection (3) are to be worked out making the same choices as the transferee actually makes in working out its taxable income as stated in its * income tax return for the income year; and
(c) the transferee ' s grossed-up franking offset amount mentioned in column 2 of item 6 in the table is the amount worked out using the formula:
| 1 | ||||
| Transferee ' s *corporate tax rate for imputation purposes for the income year | × | Franking offsets |
where:
franking offsets
means the total amount of
*
tax offsets to which the transferee is entitled for the income year under Division
207
and Subdivision
210-H
(except those that are subject to the refundable tax offset rules because of section
67-25
).
707-310(4)
The second condition is that once the amounts of the transferee ' s income or gains have been worked out under subsection (3) they are not reduced by:
(a) deductions, or losses, other than losses in the * bundle; or
(b) taxes or expenses described in subsection 375-805(4) (which is about * net exempt film income).
Note:
One of the effects of subsection (4) is that, for working out how much of a film loss in the bundle can be deducted from the transferee ' s net exempt film income or net assessable film income:
707-310(5)
The third condition is that once the amounts of the transferee ' s * exempt income have been worked out under subsection (3), assume that the transferee had no losses, outgoings or taxes described in subsection 36-20(1) (which is about * net exempt income), in working out how much of a * tax loss in the * bundle can be deducted from the transferee ' s net exempt income.
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