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

9   After section 170-40

Insert:

170-42 If the income company has become the head company of a consolidated group or MEC group

(1) The condition in subsection (2) of this section applies to the*income company instead of the condition in subsection 170-40(2) if the conditions in subsections 170-30(1) and (2) are met in relation to the*loss company and the income company apart from section 170-33 and either:

(a) both these circumstances exist:

(i) after the start of the*loss year but before the relevant time described in subsection 170-30(4), the income company became the*head company of a*consolidated group or of a*MEC group that came into existence after the start of the loss year;

(ii) the loss year and*deduction year are not the same; or

(b) all these circumstances exist:

(i) the income company is, at the relevant time described in subsection 170-30(4), the head company of a MEC group;

(ii) before that time but after the end of the loss year, the MEC group was involved in an application event described in section 719-300 (but not covered by subsection 719-300(4) or (5));

(iii) the income company would be taken under section 719-305 to have transferred losses to itself under Subdivision 707-A, assuming it had made losses while head company of the group or of a consolidated group involved in the event;

(iv) the MEC group or consolidated group came into existence before the start of the*loss year.

Note: An application event involves either expanding an existing MEC group by including extra eligible tier-1 companies of the top company for the group or creating a MEC group because more companies become eligible tier-1 companies of the top company of which the head company of a consolidated group is an eligible tier-1 company.

(2) The*income company must have been able to deduct the*tax loss in the*deduction year assuming that it had incurred the tax loss for the*loss year.

(3) The condition in subsection (4) of this section applies to the*income company instead of the condition in subsection 170-40(2) if the conditions in subsections 170-30(1) and (2) are met in relation to the*loss company and the income company because of section 170-33.

(4) The*income company must have been able to deduct the*tax loss in the*deduction year assuming that it had incurred the tax loss, for the income year in which the loss would have been transferred to it as described in paragraph 170-33(2)(c), because of one or more transfers under Subdivision 707-A described in that paragraph.