Taxation Laws Amendment Act (No. 5) 2003 (142 of 2003)

Schedule 7 Application of same business test

Part 2 Bad debts

Division 1 Main amendment

Income Tax Assessment Act 1997

16 Section 165-126

Repeal the section, substitute:

165-126 Alternatively, company must carry on same business

(1) This section sets out the condition that the company must meet to be able to deduct a debt or part of a debt that it writes off as bad in the *current year if:

(a) either:

(i) the company fails to meet a condition in subsection 165-123(2), (3) or (4); or

(ii) it is not practicable to show that the company meets the conditions in those subsections; and

(b) paragraph 165-120(1)(b) (about the Commissioner thinking it is unreasonable to require the company to meet the conditions in section 165-123) does not apply.

Note: Other provisions may treat the company as meeting, or failing to meet, the conditions in subsections 165-123(2), (3) and (4).

(2) The company must satisfy the *same business test for the *second continuity period (the same business test period ). Apply the test to the *business the company carried on immediately before the time (the test time ) shown in the relevant item of the table.

Test time
Item	If:	The test time is:
1	It is practicable to show there is a period that meets these conditions: (a) the period starts at the start of the first continuity period; (b) the company would meet the conditions in subsections 165-123(2), (3) and (4) if the period were the ownership test period for the purposes of this Act	The latest time that it is practicable to show is in the period
2	Item 1 does not apply and either: (a) the debt was incurred before the *current year; or (b) the company came into being during the current year	The end of the day on which the debt was incurred
3	All these conditions are met: (a) item 1 does not apply; (b) the debt was incurred in the *current year; (c) the company was in being throughout the current year	The start of the current year

For the same business test: see Subdivision 165-E.

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