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

20   At the end of section 170-145

Add:

(7) Subsection (6) does not apply if the transfer occurs because either or both of the conditions in subsections 170-142(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 170-142(2) or (4) (as appropriate), would have included the*net capital loss.

Note 1: There will be 2 or more bundles of losses identified if both of the conditions in subsections 170-142(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 170-142(4) if the conditions in subsections 170-130(1) and (2) are met in relation to the loss company and the gain company because of multiple applications of section 170-133 each involving a different first link company.

Step 2. For each*bundle identified, work out how much of the*net capital loss the gain company would have been able to apply in working out its*net capital gain for the application year assuming that:

(a) the loss could have been applied in that year only after the application 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 gain 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 applied only in the order in which the loss company made them.

Note 1: If the assumption in subsection 170-142(2) is relevant to the bundle, it would have included losses made by the gain company and transferred (or taken to be transferred) to the company (from itself) under Subdivision 707-A.

Note 2: If the assumption in paragraph 170-142(4) is relevant to the bundle, it would have included losses actually made by the first link company and transferred (by one or more transfers under Subdivision 707-A) to the gain company.

Step 3. Total every result of step 2 for the*net capital loss.