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-B - Tax benefits from unused deductions  

SECTION 175-30   Someone else obtains a tax benefit because of a deduction, income or capital gain available to company  

175-30(1)    
The Commissioner may disallow a deduction 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 incurred some or all (the available expense ) of the loss, outgoing or expenditure that the deduction is for.

However, the deduction may be disallowed only to the extent of the available expense.

175-30(2)    

The Commissioner may disallow deductions 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 some or all (the available amount ) of the assessable income that the company *derived or of a *capital gain that accrued to the company:

(i) before it incurred the losses, outgoings or expenditure that the deductions were for; and

(ii) in the same income year as it incurred them;

had not been derived or had not accrued, as the case may be.

The disallowed deductions and parts of deductions may exceed the available amount.

Note:

The disallowance may result in a tax loss for the income year. See section 175-35 .

175-30(3)    
An expression means the same in this section as in Part IVA of the Income Tax Assessment Act 1936 .

175-30(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 deductions of an insolvent company.