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-CB - Tax benefits from unused capital losses of the current year  

SECTION 175-60   Capital gain injected into company because of available capital loss  

175-60(1)    
The Commissioner may *disallow *capital losses of a company (or parts of them) for an income year if:

(a) the company has made a *capital gain some or all of which (the injected capital gain ) it would not have made if it did not have those capital losses; and

(b) the injected capital gain was made in that income year.

The disallowed capital losses and parts of capital losses may exceed the amount of the injected capital gain.

Note:

The disallowance may result in a net capital loss for the income year: see section 175-75 .

175-60(2)    

The Commissioner cannot *disallow the *capital losses or parts of the capital losses if the *continuing shareholders will benefit from the making of the injected capital gain to an extent that the Commissioner thinks fair and reasonable having regard to their respective *shareholding interests in the company.

Note:

Section 175-100 allows the Commissioner to disallow capital losses or parts of capital losses of an insolvent company.

175-60(3)    
The continuing shareholders are the individuals who had *shareholding interests in the company both immediately before the *injected capital gain was made, and immediately afterwards.