New Business Tax System (Consolidation and Other Measures) Act (No. 1) 2002 (117 of 2002)

Schedule 12   Consolidation: amendments relating to Division 170

Income Tax Assessment Act 1997

10   At the end of section 170-45

Add:

(4) Subsections (2) and (3) do not apply if the transfer occurs because either or both of the conditions in subsections 170-42(2) and (4) are met. In that case, the amount transferred also cannot exceed the amount worked out as follows:

Method statement

Step 1. Identify each*bundle of losses that, on the assumption in subsection 170-42(2) or (4) (as appropriate), would have included the*tax loss or*film loss (as appropriate).

Note 1: There will be 2 or more bundles of losses identified if both of the conditions in subsections 170-42(2) and (4) are met.

Note 2: There will be more than 1 bundle of losses identified on the basis of the assumption in paragraph 170-42(4) if the conditions in subsections 170-30(1) and (2) are met in relation to the loss company and the income company because of multiple applications of section 170-33 each involving a different first link company.

Step 2. For each*bundle identified, work out how much of the*tax loss or*film loss (as appropriate) the*income company would have been able to deduct in the*deduction year assuming that:

(a) the loss could have been deducted in that year only after the deduction in that year of any other losses of that*sort that would have been included in the bundle, other than losses (the transferable losses ) that could be transferred from the*loss company to the income company for that year; and

(b) if the bundle would have included 2 or more transferable losses of that sort - those losses could have been deducted only in the order in which the loss company incurred them.

Note 1: If the assumption in subsection 170-42(2) is relevant to the bundle, it would have included losses incurred by the income company and transferred (or taken to be transferred) to the company (from itself) under Subdivision 707-A.

Note 2: If the assumption in paragraph 170-42(4) is relevant to the bundle, it would have included losses actually incurred by the first link company and transferred (by one or more transfers under Subdivision 707-A) to the income company.

Step 3. Total every result of step 2 for the*tax loss or*film loss (as appropriate).