Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-5 - CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS  

Division 175 - Use of a company ' s tax losses or deductions to avoid income tax  

Subdivision 175-CB - Tax benefits from unused capital losses of the current year  

SECTION 175-70   Someone else obtains a tax benefit because of capital loss or gain available to company  

175-70(1)    
The Commissioner may *disallow a *capital loss of a company if:

(a) a person (other than the company) has obtained or will obtain a tax benefit in connection with a *scheme; and

(b) the scheme would not have been entered into or carried out if the company had not made some or all (the available capital loss ) of the capital loss.

However, the capital loss may be disallowed only to the extent of the available capital loss.

175-70(2)    
The Commissioner may *disallow *capital losses of a company (or parts of them) if:

(a) a person has obtained or will obtain a tax benefit in connection with a *scheme; and

(b) the scheme would not have been entered into or carried out if the company had not made some or all (the available capital gains ) of the *capital gains it made:

(i) before it made the capital losses; and

(ii) in the same income year as it made them.

The disallowed capital losses and parts of capital losses may exceed the amount of the available capital gains.

Note:

The disallowance may result in a tax loss for the income year: see section 175-75 .

175-70(3)    
An expression means the same in this section as in Part IVA of the Income Tax Assessment Act 1936 .

175-70(4)    
The Commissioner cannot *disallow under this section if:

(a) the person who has obtained or will obtain the tax benefit had a *shareholding interest in the company at some time during the income year; and

(b) the Commissioner considers the tax benefit to be fair and reasonable having regard to that shareholding interest.

Note:

Section 175-100 allows the Commissioner to disallow the whole or part of any capital losses of an insolvent company.