Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 719 - MEC groups  

Subdivision 719-F - Losses  

Maintaining the same ownership to be able to utilise loss

SECTION 719-265   What is the test company?  

719-265(1)    
To identify for the purposes of section 719-260 the company that is the test company for the focal company for the loss:

(a) first, identify the test company for the focal company by applying whichever one of subsections (2), (3), (3A), (4) and (6) is relevant; and

(b) then, if the condition in column 1 of an item of the table is met, apply this section again to identify the test company as if the company described in column 2 of the item were the focal company, taking account only of things that happened before the event described in column 3 of the item.

Repeated application of this section
	Column 1 If the test company for the focal company is identified:	Column 2 Apply this section again as if this company were the focal company:	Column 3 Take account only of things that happened before this event:
1	Under subsection (2) as the company that is the test company for the transferor	The transferor mentioned in subsection (2)	The transfer mentioned in subsection (2)
2	Under subsection (6) as the company that is the test company for the first head company	The first head company mentioned in subsection (6)	The first head company ceasing to be the *head company of the *MEC group mentioned in subsection (6)

Note:

More than 2 applications of this section may be needed to identify the test company for the focal company.

COT transfer of loss to focal company

719-265(2)    
The test company for the focal company is the company described in column 2 of the relevant item of the table if the focal company made the loss because of a ^* COT transfer to the focal company.

Test company for the focal company
	Column 1 If:	Column 2 The test company for the focal company is:
1	The focal company and the transferor are the same company	The focal company
2	The focal company and the transferor are different companies	The company that is the test company for the transferor

Loss transferred because business continuity test satisfied

719-265(3)    

The test company for the focal company is the company described in column 2 of the relevant item of the table if the focal company made the loss because the loss was transferred under Subdivision 707-A to the focal company from a company because it satisfied the *business continuity test for:

(a) the *business continuity test period; and

(b) the ^* test time specified in Division 165 or 166 or section 707-125 .

Test company for the focal company
	Column 1 If:	Column 2 The test company for the focal company is:
1	The focal company was the *head company of a *MEC group at the time of the transfer	The company that was the *top company for the MEC group at the time of the transfer
2	The focal company was not the *head company of a *MEC group at the time of the transfer	The focal company

Transfer of tax loss from designated infrastructure project entity

719-265(3A)    

If:

(a) the focal company made the loss because the loss was transferred under Subdivision 707-A to the focal company as the * head company of a * MEC group; and

(b) subsection 707-120(5) (about designated infrastructure project entities joining consolidated groups) applies to the transfer;

the test company for the focal company is the company that was the * top company for the MEC group at the time of a transfer.

Loss not transferred from a company

719-265(4)    
The test company for the focal company is the company described in column 2 of the relevant item of the table if the focal company made the loss apart from a transfer of the loss under Subdivision 707-A from a company.

Test company for the focal company
	Column 1 If:	Column 2 The test company for the focal company is:
1	The focal company made the loss apart from Subdivision 707-A and was the *head company of a *MEC group at the start of the income year for which it made the loss	The company that was the *top company for the MEC group at the start of the income year
2	The focal company made the loss because it was transferred under Subdivision 707-A to the focal company as the *head company of a *MEC group from an entity other than a company	The company that was the *top company for the MEC group at the time of the transfer
3	Neither item 1 nor item 2 applies	The focal company

Relationship between subsections (2), (3) and (4)

719-265(5)    
Subsection (2) or (3), and not subsection (4), is relevant for identifying the test company for the focal company if the focal company made the loss apart from a transfer under Subdivision 707-A , and later transferred the loss to itself under that Subdivision.

Change of head company

719-265(6)    
If, under section 719-90 , the focal company is taken to have made the loss because:

(a) a company (the first head company ) other than the focal company made the loss apart from that section and either:

(i) was the ^* head company of a ^* MEC group at any time during the income year for which it made the loss; or

(ii) became the head company of a MEC group after that income year (without having been a ^* subsidiary member of the group before becoming the head company); and

(b) the focal company was later the head company of the MEC group;

the test company for the focal company is the company that is the test company for the first head company.

Note:

Section 719-90 applies if there is a change in the head company of a MEC group, treating the later head company as if what had happened to the earlier head company had happened to the later head company.

719-265(7)    

Subsections (2), (3), (3A) and (4) and section 719-90 have effect subject to subsection (6) of this section.