Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 713 - Rules for particular kinds of entities  

Subdivision 713-L - Life insurance companies  

Losses of life insurance companies' subsidiaries joining consolidated group

SECTION 713-540   Losses of entities whose membership interests are segregated exempt assets of life insurance company  

713-540(1)    
This section applies if:

(a) a ^* life insurance company becomes a ^* member of a ^* consolidated group at a time (the joining time ); and

(b) at the joining time, the life insurance company owns, either directly or indirectly through one or more interposed entities, all the ^* membership interests in yet another entity (the life insurance subsidiary ) that becomes a ^* subsidiary member of the group at that time; and

(c) all the following membership interests are ^* segregated exempt assets of the life insurance company:

(i) the membership interests (if any) that the life insurance company owns directly in the life insurance subsidiary;

(ii) the membership interests (if any) that the life insurance company owns directly in the interposed entities.

713-540(2)    
A ^* tax loss or ^* net capital loss of the life insurance subsidiary for an income year ending before the joining time cannot be ^* utilised by the life insurance subsidiary for an income year ending after that time.

Note:

This prevents the loss from being transferred to the head company of the consolidated group under Subdivision 707-A (because it means the life insurance subsidiary could not have utilised the loss for the trial year). As a result, section 707-150 prevents any other entity from utilising the loss for an income year ending after the joining time.