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-CC - Change of ownership or control of company that has an unrealised net loss  

Operative provisions

SECTION 165-115BB   Order of application of assets: residual unrealised net loss  

Order in which assets are to be applied

165-115BB(1)    
In applying subsection 165-115B(2) or 165-115BA(3) in respect of assets that the company owned at the changeover time:

(a) the company ' s *capital losses are taken to have been made, the company is taken to have become entitled to deductions and the company is taken to have made *trading stock losses in the order in which the events that resulted in the capital losses, deductions or trading stock losses occurred; and

(b) if 2 or more such events occurred at the same time, they are taken to have occurred in such order as the company determines.

Residual unrealised net loss

165-115BB(2)    

The company ' s residual unrealised net loss , at the time of an event (the relevant event ) that resulted in the company making a *capital loss, becoming entitled to a deduction or making a *trading stock loss, in respect of an asset, is the amount worked out using the following formula:

Unrealised net loss   −

Previous capital losses, deductions or trading stock losses

where:

previous capital losses, deductions or trading stock losses
means the total of the following:

(a) capital losses that the company made, deductions to which the company became entitled, or *trading stock losses that the company made, as a result of events earlier than the relevant event in respect of assets that the company owned at the *changeover time;

(b) each reduction that section 715-105 (as applying to the company as the *head company of a *consolidated group or *MEC group) makes in respect of such an asset because an entity ceased before the time of the relevant event to be a *subsidiary member of the group (but counting only the greater or greatest such reduction if 2 or more are made for the same asset);

or nil if there are none.

unrealised net loss
means the company ' s unrealised net loss at the last changeover time that occurred before the relevant event.

Note:

For changeover time see sections 165-115C and 165-115D .