Income Tax Assessment Act 1997
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Hide history noteSECTION 719-775 Cancellation of loss 719-775(1)
This section reduces to nil a loss that would otherwise be * realised for income tax purposes by a * realisation event that happens to an * equity or loan interest (the realised interest ) in an entity (the first entity ) when it is owned by another entity (the owner ), if the conditions in subsections (2) and (4) are met.
719-775(2)
The first condition is that, at some time during the period (the ownership period ) when the owner owned the realised interest:
(a) the first entity was a * subsidiary member of a * MEC group (except an * eligible tier-1 company), and the owner was not a * member of the group; or
(b) the realised interest was an * external indirect equity or loan interest in a subsidiary member of a MEC group (except an eligible tier-1 company); or
(c) the realised interest was an * equity or loan interest in an entity that, at that time:
(i) owned an equity or loan interest in a subsidiary member of a MEC group (except an eligible tier-1 company); and
(ii) was not a member of the group; or
(d) the realised interest was an equity or loan interest in an entity that owned at that time an external indirect equity or loan interest in a subsidiary member of a MEC group (except an eligible tier-1 company); or
(e) the realised interest was an equity or loan interest, or an * indirect equity or loan interest, in an eligible tier-1 company that was a member of a MEC group at that time.
719-775(3)
An * equity or loan interest in an entity (the test entity ) is an external indirect equity or loan interest in a * subsidiary member of a * MEC group if, and only if, neither the owner of the interest nor the test entity is a member of the group and:
(a) the test entity owns an equity or loan interest in the subsidiary member; or
(b) the test entity owns an equity or loan interest that is an external indirect equity or loan interest in the subsidiary member because of one or more other applications of this subsection.
719-775(4)
The second condition is that, at the same or a different time during the ownership period:
(a) the owner was, or * controlled (for value shifting purposes), the * head company of a * MEC group because of which the first condition is satisfied; or
(b) the owner was an * associate of an entity that, at the same or a different time during the ownership period, was, or controlled (for value shifting purposes), the head company of such a MEC group.
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