Taxation Laws Amendment Act (No. 5) 2003 (142 of 2003)
Schedule 7 Application of same business test
Part 2 Bad debts
Division 1 Main amendment
Income Tax Assessment Act 1997
16 Section 165-126
Repeal the section, substitute:
165-126 Alternatively, company must carry on same business
(1) This section sets out the condition that the company must meet to be able to deduct a debt or part of a debt that it writes off as bad in the *current year if:
(a) either:
(i) the company fails to meet a condition in subsection 165-123(2), (3) or (4); or
(ii) it is not practicable to show that the company meets the conditions in those subsections; and
(b) paragraph 165-120(1)(b) (about the Commissioner thinking it is unreasonable to require the company to meet the conditions in section 165-123) does not apply.
Note: Other provisions may treat the company as meeting, or failing to meet, the conditions in subsections 165-123(2), (3) and (4).
(2) The company must satisfy the *same business test for the *second continuity period (the same business test period ). Apply the test to the *business the company carried on immediately before the time (the test time ) shown in the relevant item of the table.
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Test time |
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Item |
If: |
The test time is: |
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1 |
It is practicable to show there is a period that meets these conditions: (a) the period starts at the start of the *first continuity period; (b) the company would meet the conditions in subsections 165-123(2), (3) and (4) if the period were the *ownership test period for the purposes of this Act |
The latest time that it is practicable to show is in the period |
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2 |
Item 1 does not apply and either: (a) the debt was incurred before the *current year; or (b) the company came into being during the current year |
The end of the day on which the debt was incurred |
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3 |
All these conditions are met: (a) item 1 does not apply; (b) the debt was incurred in the *current year; (c) the company was in being throughout the current year |
The start of the current year |
For the same business test: see Subdivision 165-E.