Income Tax Assessment Act 1997
CHAPTER 3
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SPECIALIST LIABILITY RULES
PART 3-90
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CONSOLIDATED GROUPS
Division 719
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MEC groups
Subdivision 719-F
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Losses
Maintaining the same ownership to be able to utilise loss
SECTION 719-260 Special test for utilising a loss because a company maintains the same owners
Meeting the conditions in section 165-12
719-260(1)
The focal company is taken to meet the conditions in section 165-12 for the claim year and the loss if and only if the company (the test company ) identified in relation to the focal company in accordance with section 719-265 would have met those conditions for that year on the relevant assumptions in:
(a) section 719-270 (which is about assuming the test company made the loss for a particular income year); and
(b) section 719-275 (which is about assuming that nothing happened in relation to certain things that would affect whether the test company would meet those conditions); and
(c) section 719-280 (which is about assuming that the test company would have failed to meet those conditions in certain circumstances).
Focal company ' s failure to meet conditions in section 165-12
719-260(2)
The focal company is taken to fail to meet a condition in section 165-12 only at:
(a) the first time the test company would have failed to meet the condition on the relevant assumptions mentioned in subsection (1); or
(b) the * test time described in subsection 166-5(6) for the test company, if:
Business continuity test for focal company under Division 166
719-260(3)
If subsection 166-5(5) affects whether the focal company can * utilise the loss for the claim year because the focal company is a * widely held company or an * eligible Division 166 company, or both, during the year, subsection 166-5(6) operates as if it required the *business continuity test to be applied to the * business the focal company carried on just before the time described in subsection (2) of this section.
Business continuity test for focal company to transfer loss
719-260(4)
If subsection 707-125(4) is relevant to working out whether the focal company can transfer the loss to a company under Subdivision 707-A , that subsection:
(a) has effect as if subsection 707-125(5) described the focal company ' s income year containing the time at which the focal company is taken under subsection (2) of this section to fail to meet a condition in section 165-12 ; and
(b) has effect despite subsection (3) of this section.
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Hide history noteSECTION 719-260 Special test for utilising a loss because a company maintains the same owners
Meeting the conditions in section 165-12
719-260(1)
The focal company is taken to meet the conditions in section 165-12 for the claim year and the loss if and only if the company (the test company ) identified in relation to the focal company in accordance with section 719-265 would have met those conditions for that year on the relevant assumptions in:
(a) section 719-270 (which is about assuming the test company made the loss for a particular income year); and
(b) section 719-275 (which is about assuming that nothing happened in relation to certain things that would affect whether the test company would meet those conditions); and
(c) section 719-280 (which is about assuming that the test company would have failed to meet those conditions in certain circumstances).
Focal company ' s failure to meet conditions in section 165-12
719-260(2)
The focal company is taken to fail to meet a condition in section 165-12 only at:
(a) the first time the test company would have failed to meet the condition on the relevant assumptions mentioned in subsection (1); or
(b) the * test time described in subsection 166-5(6) for the test company, if:
(i) Division 166 is relevant to working out whether the test company could have * utilised the loss for the claim year on the relevant assumptions mentioned in paragraphs (1)(a) and (b); and
(ii) the test company is not assumed under section 719-280 to fail to meet the condition before the test time.
Note:
If the focal company is taken to fail to meet a condition in section 165-12 , the focal company will not be able to utilise the loss for the claim year unless the focal company meets the condition in section 165-13 by satisfying the business continuity test. That test applies to the focal company (and not the test company).
Business continuity test for focal company under Division 166
719-260(3)
If subsection 166-5(5) affects whether the focal company can * utilise the loss for the claim year because the focal company is a * widely held company or an * eligible Division 166 company, or both, during the year, subsection 166-5(6) operates as if it required the *business continuity test to be applied to the * business the focal company carried on just before the time described in subsection (2) of this section.
Business continuity test for focal company to transfer loss
719-260(4)
If subsection 707-125(4) is relevant to working out whether the focal company can transfer the loss to a company under Subdivision 707-A , that subsection:
(a) has effect as if subsection 707-125(5) described the focal company ' s income year containing the time at which the focal company is taken under subsection (2) of this section to fail to meet a condition in section 165-12 ; and
(b) has effect despite subsection (3) of this section.
Note:
For working out whether certain losses can be transferred under Subdivision 707-A , subsection 707-125(4) modifies the operation of subsection 166-5(6) by extending the business continuity test period to include the income year described in subsection 707-125(5) .
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