Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-5 - CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS  

Division 165 - Income tax consequences of changing ownership or control of a company  

Subdivision 165-CD - Reductions after alterations in ownership or control of loss company  

Operative provisions

SECTION 165-115R   When company is a loss company at first or only alteration time in income year  

Application

165-115R(1)    
The question whether a company is a loss company at the first or only alteration time in a particular income year is to be worked out in this way.

Assumed income year

165-115R(2)    
Assume that the period that started at the beginning of the income year and ended at the alteration time is an income year and apply paragraphs (3)(a), (b), (c) and (d) on that assumption.

What is a loss company

165-115R(3)    
The company is a loss company at the alteration time if:

(a) at the beginning of the income year it had a * tax loss or tax losses for an earlier income year or earlier income years; or

(b) at the beginning of the income year it had a * net capital loss or net capital losses for an earlier income year or earlier income years; or

(c) it has a tax loss for the income year, calculated as if the income year were a period for the purposes of Subdivision 165-B ; or

(d) it has a net capital loss for the income year, calculated as if the income year were a period for the purposes of Subdivision 165-CB ; or

(e) it has an adjusted unrealised loss at the alteration time.

Note:

For adjusted unrealised loss , see section 165-115U .

How losses are to be calculated

165-115R(4)    
In applying subsection (3):

(a) a * tax loss or *net capital loss that was taken into account in working out under this section whether the company was a *loss company at an alteration time in a previous income year is to be disregarded; and

(b) Subdivision 170-D is to be disregarded.

Overall loss

165-115R(5)    
The sum of:

(a) the amount or amounts of any *tax loss or tax losses referred to in paragraph (3)(a); and

(b) the amount or amounts of any *net capital loss or net capital losses referred to in paragraph (3)(b); and

(c) the amount of any tax loss referred to in paragraph (3)(c); and

(d) the amount of any net capital loss referred to in paragraph (3)(d); and

(e) the amount of any adjusted unrealised loss referred to in paragraph (3)(e);

is the *loss company ' s overall loss at the alteration time.

Note:

The loss company ' s overall loss is relevant for the purposes of subsections 165-115ZB(3) and (6).

Certain losses to be disregarded

165-115R(6)    
A reference in a paragraph of subsection (3) and in the corresponding paragraph of subsection (5) to a particular loss is a reference only to a loss to the extent to which it represents an outlay or loss of any of the economic resources of the company.

Note:

Where the income tax law allows, as all or part of a loss, an amount for the decline in value of a depreciating asset that exceeds the actual economic depreciation or depletion of the asset concerned, the excess is not to be regarded for the purposes of this subsection as representing an outlay or loss of economic resources of the company.

165-115R(6A)    

Subsection (6) does not apply to paragraphs (3)(e) and (5)(e) if the company has chosen to use the *global method of working out whether it has an adjusted unrealised loss at the alteration time.

Amounts of losses may be reduced

165-115R(7)    
The amounts referred to in paragraphs (5)(a) to (d) may be reduced under section 165-115T .