New Business Tax System (Consolidation and Other Measures) Act 2003 (16 of 2003)

Schedule 20   Consolidation: transfers of losses involving financial corporations

Financial Corporations (Transfer of Assets and Liabilities) Act 1993

7   At the end of Schedule 2

Add:

Part 2 - Addition of provisions at the end of Subdivision 170-B

Special rules for transfer from head company of consolidated group or MEC group

170-175 Transfer of a net capital loss made by the head company because of Subdivision 707-A

(1) The other sections of this Subdivision operate in relation to the actual or proposed transfer of a *net capital loss on the basis described in this section if:

(a) the *head company of a *consolidated group or *MEC group made the net capital loss because of Subdivision 707-A; and

(b) the company (the real loss-maker ) that made the net capital loss apart from Subdivision 707-A is a *member of the group at the end of the income year for which it is proposed to transfer the loss under this Subdivision.

(2) The other sections of this Subdivision, except section 170-128, operate as if:

(a) the *head company were a transferring corporation within the meaning of the Financial Corporations (Transfer of Assets and Liabilities) Act 1993; and

(b) the head company had made the *net capital loss for the income year for which the real loss-maker made the net capital loss (apart from Subdivision 707-A).

Note: This has the effect that (because of subsection 170-110(1)) those sections operate as if the head company were the loss company and the capital loss year were the income year for which the real loss-maker made the loss.

(3) Section 170-128 operates as if:

(a) the real loss-maker were the *loss company; and

(b) section 701-1 (the single entity rule) could not affect whether the Financial Corporations (Transfer of Assets and Liabilities) Act 1993 would have applied to the transfer described in section 170-28.

(4) Subsection 170-135(2) operates as if the reference in it to Subdivision 165-CA were a reference to that Subdivision as it operates given the effect of Subdivision 707-B, and Subdivision 719-F if relevant, on the operation of Subdivision 165-A.

Note: Subdivision 165-CA determines whether a net capital loss can be applied by reference to whether Subdivision 165-A would permit the deduction of a tax loss for the same income year as the net capital loss. Subdivisions 707-B and 719-F affect the operation of Subdivision 165-A in relation to losses made by a company because of Subdivision 707-A.