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-C - Amount of transferred losses that can be utilised  

How much of a transferred loss can be utilised?

SECTION 707-315   What is a bundle of losses?  

707-315(1)    
A bundle of losses comes into existence at the time (the initial transfer time ) a loss of any ^* sort that has not previously been transferred under Subdivision 707-A is transferred under that Subdivision from an entity (the real loss-maker ) to the ^* head company of a ^* consolidated group (the joined group ).

707-315(2)    
At the initial transfer time, the bundle consists of every loss (regardless of its ^* sort) that:

(a) is transferred at that time under that Subdivision from the real loss-maker to the ^* head company of the joined group; and

(b) has not been transferred under that Subdivision before that time.

Note:

For certain purposes, section 707-327 of the Income Tax (Transitional Provisions) Act 1997 treats the bundle as including certain other losses too.

707-315(3)    
The bundle still exists at a later time if it includes at that later time at least one loss of any ^* sort that could be ^* utilised or otherwise reduced by an entity for an income year ending after that time (even if one or more losses have ceased to be included in the bundle before that later time).

Note:

A bundle continues to exist even if the losses in it are transferred again under Subdivision 707-A after the initial transfer time.

707-315(4)    
A loss ceases to be included in a ^* bundle at the first time for which it is true that the loss cannot be ^* utilised or otherwise reduced by any entity for an income year ending after that time.

707-315(5)    

If, had a loss been made by a company as assumed under a provision of Division 170 , the loss would have been transferred under Subdivision 707-A , this Subdivision and other provisions that relate to or may affect the ^* available fractions for one or more ^* bundles of losses (including sections 707-140 and 719-325 ) operate as if the transfer had occurred.

Note:

Section 707-140 provides for a choice to cancel a transfer under Subdivision 707-A . Section 719-325 provides for a choice to cancel all losses in certain bundles of losses. A choice under one of those sections may result in a bundle not coming into existence, or not being in existence after a certain time.

707-315(6)    

To avoid doubt, a choice under section 707-145 or 719-325 , as it operates because of subsection (5) of this section, relating to the loss does not affect or prevent:

(a) a transfer of the loss that would have occurred under Subdivision 707-A as described in another application of that subsection involving a different company; or

(b) ^* utilisation of the loss by the company that actually made the loss and is different from the company assumed under Division 170 to have made the loss.

Note:

Therefore a choice under section 707-145 or 719-325 , as operating because of subsection (5) of this section, will be able to cause only one bundle not to exist, and will not affect the existence of other bundles that are treated as existing because of other operations of that subsection.