Tax Laws Amendment (2009 Measures No. 4) Act 2009 (88 of 2009)
Schedule 4 Consolidation: application of losses with nil available fraction
Income Tax Assessment Act 1997
4 At the end of Subdivision 707-D
Add:
707-415 Application of losses with nil available fraction for certain purposes
(1) Subsection (2) applies if:
(a) an entity (the joining entity ) becomes a*member of a*consolidated group at a time (the joining time ); and
(b) a*tax loss or a*net capital losswas transferred from the joining entity to the*head company of the group at the joining time under Subdivision 707-A; and
(c) that loss is included in a*bundle of losses for which the*available fraction is 0.
(2) The*head company can choose to apply the loss as shown in the table:
|
Item |
If ... |
the head company can choose to apply the loss in reduction of ... |
for the purposes of ... |
|
1 |
(a) the joining entity owed a debt just before the joining time to an entity that was not a*member of the group at the joining time; and (b) the loss is wholly or partly attributable to the debt; and (c) Subdivision 245-E in Schedule 2C to theIncome Tax Assessment Act 1936applies in relation to the debt (or another debt that is reasonably connected to the debt) because the debt is forgiven after the joining time |
the total net forgiven amount mentioned in subsection 245-105(1) in that Schedule |
applying that total net forgiven amount in accordance with subsections 245-105(5), (6), (7) and (8) of that Schedule. |
|
2 |
(a) the joining entity owed a*limited recourse debt just before the joining time to an entity that was not a*member of the group at the joining time; and (b) Division 243 applies in relation to the debt; and (c) the loss is wholly or partly attributable to a deduction mentioned in paragraph 243-15(1)(c) for an income year ending before the joining time |
the deduction |
working out the excess referred to in subsection 243-35(1). |
|
3 |
(a) the joining entity ceases to be a*subsidiary member of the group at a time (the leaving time ) after the joining time; and (b) the entity's liabilities at the leaving time are the same as, or are reasonably connected to, the liabilities that it had at the joining time |
the amount remaining mentioned in paragraph 104-520(1)(b) |
working out whether*CGT event L5 happens at the leaving time, and if so, the amount of any*capital gain under subsection 104-520(3). |
Limits on application of loss
(3) The loss can be applied under subsection (2) in relation to an income year only to the extent that it could be*utilised by the*head company for the income year, on the assumption that the*available fraction for the*bundle of losses was 1.
(4) The amount of the loss that may be applied in accordance with item 1 of the table in subsection (2) cannot exceed the gross forgiven amount (within the meaning of section 245-75 in Schedule 2C to theIncome Tax Assessment Act 1936) of the debt to which the loss is attributable.
(5) The amount of the loss that may be applied in accordance with item 2 of the table in subsection (2) cannot exceed the amount of the loss that is attributable to the deduction mentioned in that item.
(6) For the purposes of item 3 of the table in subsection (2), if:
(a) assuming that the joining entity ceased to be a*subsidiary member of the*consolidated group just after the joining time, the*head company of the group would make a*capital gain because of*CGT event L5; and
(b) the sum of the losses in the*bundle of losses mentioned in paragraph (1)(c) exceeds the amount of the capital gain;
the total amount of those losses that may be applied in accordance with that item cannot exceed the amount of the capital gain.
(7) To avoid doubt, a loss can be applied under this section only to the extent that it has not already been applied.
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