Taxation Laws Amendment Act (No. 5) 2003 (142 of 2003)

Schedule 8   Tax losses

Taxation Administration Act 1953

22   Subsections 45-330(2A) and (3) in Schedule 1

Repeal the subsections, substitute:

Special rule for some entities

(2A) If an entity:

(a) has *tax losses transferred to it under Subdivision 707-A of the Income Tax Assessment Act 1997; or

(b) is a *corporate tax entity at any time during the *base year;

the adjusted taxable income of the entity for the base year is worked out under subsection (1) as if paragraph (1)(c) were replaced by the following provision:

(c) the lesser of the following amounts:

(i) the amount of any tax loss, to the extent that you can carry it forward to the next income year;

(ii) the amount of the deductions for tax losses used in making your *base assessment.

Special rule for life insurance companies

(3) The adjusted taxable income of a *life insurance company for the *base year is worked out as follows:

Method statement

Step 1. Recalculate the *ordinary class of the taxable income for the *base assessment on the basis that the assessable income that relates to the class did not include any *net capital gain.

Step 2. Add to the step 1 result the *complying superannuation class of the taxable income for the *base assessment.

Step 3. Add to the step 2 result the deductions for *tax losses used in making the *base assessment.

Step 4. Reduce the step 3 result by the lesser of the following amounts:

(a) the amount of any tax loss, to the extent that the *life insurance company can carry it forward to the next income year;

(b) deductions for *tax losses used in making the *base assessment.