INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 2A - Calculation of taxable income  

Subdivision B - Calculation of taxable income where disqualifying event occurs  

SECTION 50D   ELIGIBLE NOTIONAL LOSS  

50D(1)   [Amount of loss]  

For the purposes of this Subdivision, the eligible notional loss of a company in relation to a year of income is the amount that is, or the sum of the amounts that are, by reason of subsections (2), (4) and (6), to be taken into account in ascertaining the eligible notional loss of the company in relation to the year of income.

50D(2)   [Ascertainment of eligible notional loss]  

Where a company satisfies the Commissioner that, at all times during a loss period, shares in the company carrying between them -

(a) the right to exercise more than one-half of the voting power in the company;

(b) the right to receive more than one-half of any dividends that might be paid by the company; and

(c) the right to receive more than one-half of any distribution of capital of the company,

were beneficially owned by a natural person or natural persons who beneficially owned shares in the company carrying between them rights of those kinds -

(d) at all times during an income period; or

(e) at all times during 2 or more income periods,

so much of the amount ascertained by deducting from the amount of the notional loss in respect of the loss period so much (if any) of that notional loss as, by the previous application of subsection (4) or (6), is to be taken into account in determining the eligible notional loss of the company in relation to the year of income as does not exceed -

(f) in a case to which paragraph (d) applies - the amount of the notional taxable income in respect of the income period referred to in that paragraph reduced by so much (if any) of that notional taxable income as has previously been taken into account for the purposes of this paragraph or paragraph (g), for the purposes of paragraph (4)(c) or (d) or for the purposes of paragraph (6)(c), (d) or (e); and

(g) in a case to which paragraph (e) applies - the sum of the amounts of the notional taxable incomes in respect of the income periods referred to in that paragraph reduced by so much (if any) of those notional taxable incomes as has previously been taken into account for the purposes of paragraph (f) or this paragraph, for the purposes of paragraph (4)(c) or (d) or for the purposes of paragraph (6)(c), (d) or (e),

shall be taken into account in determining the amount of the eligible notional loss of the company in relation to the year of income.

50D(3)   [Reference to loss and income periods]  

In subsection (2) -

(a) a reference to a loss period in relation to a company shall be read as not including a reference to a loss period at the commencement of which a disqualifying event is deemed to have occurred in relation to the company by reason of the operation of paragraph 50H(1)(d) , (e), (f), (g) or (h); and

(b) a reference to an income period in relation to a company shall be read as not including a reference to an income period at the commencement of which a disqualifying event is deemed to have occurred in relation to the company by reason of the operation of paragraph 50H(1)(d) , (e), (f), (g) or (h).

50D(4)   [No income, or no expenditure, in subsequent period]  

Where a company did not, at any time during a period that is a subsequent continuous business period in relation to a loss period -

(a) derive income from a business of a kind that it did not carry on, or from a transaction of a kind that it had not entered into in the course of its business operations, before the end of the loss period; or

(b) incur expenditure in carrying on a business of a kind that it did not carry on, or as a result of a transaction of a kind that it had not entered into in the course of its business operations, before the end of the loss period,

so much of the amount ascertained by deducting from the amount of the notional loss in respect of the loss period so much (if any) of that notional loss as, by the previous application of subsection (2) or (6), is to be taken into account in determining the eligible notional loss of the company in relation to the year of income as does not exceed -

(c) in a case where there is only one income period within that subsequent continuous business period - the notional taxable income of that income period reduced by so much of that notional taxable income as has been taken into account for the purposes of paragraph (2)(f) or (g), for the purposes of this paragraph or paragraph (d) or for the purposes of paragraph (6)(c), (d) or (e); or

(d) in a case where there are 2 or more income periods within that subsequent continuous business period - the sum of the notional taxable incomes of those income periods reduced by so much of those notional taxable incomes as has been taken into account for the purposes of paragraph (2)(f) or (g), for the purposes of paragraph (c) or this paragraph or for the purposes of paragraph (6)(c), (d) or (e),

shall be taken into account in determining the eligible notional loss of the company in relation to the year of income.

50D(5)   [Subsec (4) not to apply in certain cases]  

Subsection (4) does not apply in relation to the notional loss in respect of a loss period in relation to a company if -

(a) before the end of that loss period, the company commenced to carry on a business that it had not previously carried on or the company entered into, in the course of its business operations, a transaction of a kind that it had not previously entered into; and

(b) the company commenced to carry on that business or entered into that transaction for the purpose, or for purposes that included the purpose, of enabling that subsection to apply in relation to that notional loss or of enabling the notional taxable income of an income period to be taken into account, in the application of that subsection, in determining the amount of that notional loss that is to be taken into account in determining the eligible notional loss of the company in relation to the year of income.

50D(6)   [No income, or no expenditure, in prior period]  

Where a company did not, at any time during a period that is a prior continuous business period in relation to a loss period -

(a) derive income from a business of a kind that it did not carry on, or from a transaction of a kind that it had not entered into in the course of its business operations, before the commencement of that prior continuous business period; or

(b) incur expenditure in carrying on a business of a kind that it did not carry on, or as a result of a transaction of a kind that it had not entered into in the course of its business operations, before the commencement of that prior continuous business period,

so much of the amount ascertained by deducting from the amount of the notional loss in respect of the loss period so much (if any) of that notional loss as, by the previous application of subsection (2) or (4), has been taken into account in determining the eligible notional loss of the company of the year of income as does not exceed -

(c) if there are no income periods within that prior continuous business period - the notional taxable income in respect of the income period at the end of which the prior continuous business period commenced reduced by so much (if any) of that notional taxable income as has been taken into account for the purposes of paragraph (2)(f) or (g), for the purposes of paragraph (4)(c) or (d), or for the purposes of this paragraph, paragraph (d) or paragraph (e);

(d) in a case where there is only one income period within that prior continuous business period - the sum of the notional taxable income in respect of that income period and the notional taxable income in respect of the income period referred to in paragraph (c) reduced by so much (if any) of those notional taxable incomes as has been taken into account for the purposes of paragraph (2)(f) or (g), for the purposes of paragraph (4)(c) or (d), or for the purposes of paragraph (c), this paragraph or paragraph (e); and

(e) in a case where there are 2 or more income periods within the prior continuous business period - the sum of the notional taxable incomes in respect of those income periods and the income period referred to in paragraph (c) reduced by so much of those notional taxable incomes as has been taken into account for the purposes of paragraph (2)(f) or (g), for the purposes of paragraph (4)(c) or (d), or for the purposes of paragraph (c), paragraph (d) or this paragraph,

shall be taken into account in determining the eligible notional loss of the company in relation to the year of income.

50D(7)   [Subsec (6) not applicable in certain cases]  

Subsection (6) does not apply in relation to the notional loss in respect of a loss period in relation to a company if -

(a) before the commencement of that loss period, the company commenced to carry on a business that it had not previously carried on or the company entered into, in the course of its business operations, a transaction of a kind that it had not previously entered into; and

(b) the company commenced to carry on that business or entered into that transaction for the purpose, or for purposes that included the purpose, of enabling that subsection to apply in relation to that notional loss or of enabling the notional taxable income of an income period to be taken into account, in the application of that subsection, in determining the amount of that notional loss that is to be taken into account in determining the eligible notional loss of the company in relation to the year of income.

50D(8)   [Definitions]  

In this section -

"prior continuous business period"
, in relation to a loss period in relation to a company, means a period commencing at the end of an income period and ending at the end of the loss period, being a period at all times during which the company carried on the same business as it carried on at the end of the income period;

"subsequent continuous business period"
, in relation to a loss period in relation to a company, means a period commencing at the end of the loss period and ending at the end of an income period, being a period at all times during which the company carried on the same business as it carried on at the end of the loss period.

50D(9)   [Meaning of ``loss period'' and ``income period'']  

In subsections (4) and (6) -

(a) a reference to a loss period in relation to a company shall be read as not including a reference to a loss period at the commencement of which a disqualifying event is deemed to have occurred in relation to the company by reason of the operation of paragraph 50H(1)(e) , (f), (g) or (h); and

(b) a reference to an income period in relation to a company shall be read as not including a reference to an income period at the commencement of which a disqualifying event is deemed to have occurred in relation to the company by reason of the operation of paragraph 50H(1)(e) , (f), (g) or (h).

50D(10)   [More than one loss period]  

Where subsection (2), (4) or (6) is applicable in relation to 2 or more loss periods, that subsection shall apply successively in relation to those loss periods in such order as the Commissioner, subject to subsection (13), determines.

50D(11)   [Order of application of subsections]  

Where 2 or more of subsections (2), (4) and (6) are applicable in relation to a loss period, those subsections shall apply in relation to that loss period in such order as the Commissioner, subject to subsection (13), determines.

50D(12)   [Order of notional taxable incomes]  

Where subsection (2), (4) or (6) is applicable in relation to a loss period and, in the application of that subsection in relation to that loss period, regard may be had to the notional taxable income of 2 or more income periods, regard shall be had to the notional taxable incomes of those income periods in such order as the Commissioner, subject to subsection (13), determines.

50D(13)   [Determination to benefit company]  

The Commissioner shall not make a determination or determinations for the purposes of the application of subsections (2), (4) and (6) in relation to a company in relation to a year of income if the effect of that determination or of those determinations would be less beneficial to the company in relation to the application of this Act in relation to the company in relation to the year of income than the effect of a different determination or determinations that could have been made for the purposes of those subsections.