Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 715 - Interactions between this Part and other areas of the income tax law  

Subdivision 715-D - Treatment of company's deferred losses under Subdivision 170-D on joining a consolidated group  

Deferred loss on 165-CC tagged asset

SECTION 715-360   Deferred losses brought in by subsidiary member  

715-360(1)    
This section applies if, just before the time (the membership time ) when a company (the deferred loss company ) becomes a ^* subsidiary member of a ^* consolidated group, it had a ^* 170-D deferred loss that:

(a) it made on a ^* CGT asset that is a ^* 165-CC tagged asset of the company at the membership time because of paragraph 165-115A(1A)(b) (which covers CGT assets on which it has 170-D deferred losses); and

(b) as at the membership time has not ^* revived.

715-360(2)    
If a ^* loss denial pool of the ^* head company is created under subsection 715-70(2) because of the deferred loss company becoming a ^* subsidiary member of the group, each ^* 170-D deferred loss of that kind that the deferred loss company had just before the membership time is added to the loss denial pool at that time.

715-360(3)    
Otherwise, a loss denial pool of the ^* head company is created at the membership time if:

(a) the membership time is not a ^* changeover time for the head company; and

(b) the deferred loss company ' s ^* final RUNL just before the membership time (as reduced by any reductions under section 715-50 or 715-55 ) was greater than nil; and

(c) the deferred loss company does not satisfy the *business continuity test for:

(i) the period (the business continuity test period ) consisting of the deferred loss company ' s ^* trial year; and

(ii) the time (the test time ) just before the ^* changeover time.

Note 1:

The 170-D deferred losses become those of the head company at the formation time because of section 701-5 (Entry history rule).

Note 2:

Paragraph (3)(b) has the effect that if the deferred loss company has other 165-CC tagged assets affected by section 715-50 or 715-55 (because the membership time is when the group comes into existence, and the other 165-CC tagged assets are membership interests in, or accounting liabilities owed by, another group member), those sections are applied before this section.

715-360(4)    
When it is created because of subsection (3), the pool consists of each 170-D deferred loss covered by subsection (2), and its loss denial balance is equal to the ^* final RUNL referred to in paragraph (3)(b).

Note:

The pool is distinct from any other loss denial pool of the head company, for example, one created under this section because another entity becomes a subsidiary member of the group at the membership time.