Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 707 - Losses for head companies when entities become members etc.  

Subdivision 707-A - Transfer of losses to head company  

Effect of transfer of loss

SECTION 707-140   Effect of transfer of loss  

707-140(1)    
To the extent that the loss is transferred under section 707-120 from the joining entity to the ^* head company of the joined group, this Act operates (except so far as the contrary intention appears) for the purposes of income years ending after the transfer as if:

(a) the head company had made the loss for the income year in which the transfer occurs; and

(b) the joining entity had not made the loss for the income year for which the joining entity actually made the loss.

707-140(1A)    

However, subsection (1) does not affect the operation of paragraph 165-211(1)(a) or (c).

Note:

This subsection ensures that the head company can only apply the version of the business continuity test in section 165-211 if the loss of the joining entity was incurred on or after 1 July 2015.

Head company may utilise loss for income year of transfer

707-140(2)    
The ^* head company is not prevented from ^* utilising the loss for the income year in which the transfer occurs merely because this Act operates as if the head company had made the loss (to the extent of the transfer) for that year.

Debt forgiveness in income year for which loss is made

707-140(3)    

If a debt of the ^* head company of the joined group is *forgiven in the income year in which the transfer occurs, sections 245-115 and 245-130 operate as if the head company had made the loss for an earlier income year.

Note:

This subsection has the effect that the loss may be reduced in accordance with one of those subsections by applying the total net forgiven amount for the income year in which the transfer occurs.