INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 3 - Deductions  

Subdivision A - General  

SECTION 80G   TRANSFER OF LOSS WITHIN COMPANY GROUP  

80G(1A)   [No operation from 1997/98 year onwards]  

The right to a deduction for an amount of a loss cannot be transferred under this section in the 1997-98 year of income or a later year of income.

Note:

To work out whether a company can transfer its tax loss to another company in the 1997-98 year of income or a later year of income: see Subdivision 170-A of the Income Tax Assessment Act 1997 .

80G(1)   [``Group company'']  

For the purposes of this section, a company shall be taken to be a group company in relation to another company in relation to a year of income if -

(a) one of the companies was a subsidiary of the other company; or

(b) each of the companies was a subsidiary of the same company,

during the whole of the year of income or, if either or both of those companies was not or were not in existence during part of the year of income, during that part of the year of income during which both companies were in existence.

80G(2)   [``subsidiary company'']  

For the purposes of this section, a company (in this subsection referred to as the subsidiary company ) shall be taken to be the subsidiary of another company (in this subsection referred to as the holding company ) during a period (in this subsection referred to as the relevant period ), being the whole or a part of a year of income, if -

(a) at all times during the relevant period, all the shares in the subsidiary company were beneficially owned by -

(i) the holding company;

(ii) a company that is, or 2 or more companies each of which is, a subsidiary of the holding company; or

(iii) the holding company and a company that is, or 2 or more companies each of which is, a subsidiary of the holding company; and

(b) there was no agreement, arrangement or understanding in force during any part of the relevant period by virtue of which any person was in a position, or would become in a position after the relevant period, to affect rights of the holding company or of a subsidiary of the holding company in relation to the subsidiary company.

80G(3)   [``Subsidiary company'']  

For the purposes of this section, where a company is a subsidiary of another company (including a company that is such a subsidiary by virtue of another application or other applications of this subsection), every company that is a subsidiary of the first-mentioned company shall be taken to be a subsidiary of that other company.

80G(4)   [When person in a position to affect rights of company]  

For the purposes of subsection (2), a person shall be taken to be in a position during a year of income, or a part of a year of income, to affect any rights of a company in relation to another company if, during the year of income, or that part of the year of income, that person has a right, power or option (whether by virtue of any provision in the constituent document of either of those companies or by virtue of any agreement or instrument or otherwise) to acquire those rights or do an act or thing that would prevent the first-mentioned company from exercising those rights for its own benefit or receiving any benefits accruing by reason of those rights.

80G(5)   [Existence of company]  

Subject to subsections (5A) and (5B), for the purposes of this section, a company shall be taken to be in existence if it has been incorporated and has not been dissolved.

80G(5A)   [Acquisition of shelf company]  

For the purposes of subsection (1), where:

(a) at a time (in this subsection called the ``acquisition time'' ) in the year of income commencing on 1 July 1984 or in a subsequent year of income, one or more companies acquired all the shares in another company (in this subsection called the ``shelf company'' ) from the shareholders in the shelf company; and

(b) the shelf company was dormant, within the meaning of Part VI of the Companies Act 1981 , throughout the period (in this subsection called the ``dormant period'' ) commencing on the day on which the shelf company was incorporated and ending at the acquisition time;

the shelf company shall be taken not to have been in existence during the dormant period.

80G(5B)   [Issue of shares by shelf company]  

For the purposes of subsection (1), where:

(a) at a time (in this subsection called the ``issue time'' ) in the year of income commencing on 1 July 1984 or in a subsequent year of income, a company (in this subsection called the ``shelf company'' ) issued shares (in this subsection called the ``newly issued shares'' ) to another company or companies;

(b) immediately before the issue time, a person or persons held other shares in the shelf company;

(c) immediately after the issue time, the shelf company redeemed all the shares in the shelf company other than the newly issued shares; and

(d) the shelf company was dormant, within the meaning of Part VI of the Companies Act 1981 , throughout the period (in this subsection called the ``dormant period'' ) commencing on the day on which the shelf company was incorporated and ending immediately before the issue time;

the shelf company shall be taken not to have been in existence during the dormant period.

80G(6)   [Year loss deemed to be incurred]  

Subject to this section, where:

(a) a resident company other than a prescribed dual resident (in this section referred to as the ``loss company'' ) is deemed to have incurred a loss for the purposes of section 79E or 80 in the year of income that commenced on 1 July 1984 or in a subsequent year of income (in this section referred to as the ``loss year'' );

(b) a resident company other than a prescribed dual resident (in this section referred to as the ``income company'' ) has, or would but for the operation of this section have, a taxable income in the year of income that commenced on 1 July 1984 or in a subsequent year of income (in this section referred to as the ``income year'' );

(ba) the loss company is not a dual resident investment company in relation to the loss year nor in relation to the income year;

(c) the loss company and the income company agree that the right to an allowable deduction under subsection 79E(3) , 79F(6) , 80(2) , 80AAA(7) or 80AA(4) , as the case requires, in respect of so much of the whole or part of the loss as has not been allowed as a deduction should be transferred to the income company in the income year;

(d) in a case where the loss year is the same year of income as the income year:

(i) the loss company is a group company in relation to the income company in relation to the loss year; and

(ii) if the loss company had incurred the loss in the year of income immediately preceding the loss year and had derived sufficient assessable income (including film income) in the loss year, the loss or that part of the loss, as the case may be, would, but for this section, be allowable as a deduction from the assessable income of the loss company in the loss year (ignoring any exempt income derived by the loss company in the loss year or in that preceding year); and

(e) in a case where the income year is a year of income subsequent to the loss year:

(i) the loss company is a group company in relation to the income company in relation to the loss year and the income year and in relation to any year of income commencing after the end of the loss year and ending before the commencement of the income year; and

(ii) if the loss company had derived sufficient assessable income (including film income) in the income year, the loss or that part of the loss, as the case may be, would, but for this section, be allowable as a deduction from the assessable income of the loss company in the income year (ignoring any exempt income derived by the loss company in the income year),

the amount of the loss or of that part of the loss, as the case may be, shall, for the purposes of the application of the provisions of this Act other than this section in relation to the income company in relation to the income year, be deemed to be a loss incurred by the income company for the purposes of section 79E , 79F , 80 , 80AAA or 80AA , as the case requires, in:

(f) a case to which paragraph (d) applies - the year of income immediately preceding the loss year; or

(g) a case to which paragraph (e) applies - the loss year.

80G(6A)   [Form and time of agreement]  

An agreement under paragraph (6)(c) must be:

(a) in writing and signed by the public officer of each of the loss company and the income company; and

(b) made before the date of lodgment of the return of income of the income company for the income year or within such further time as the Commissioner allows.

80G(7)   [Loss exceeds net income]  

An agreement under paragraph (6)(c) relating to the transfer to the income company of a right to an allowable deduction under subsection 79E(3) , 80(2) or 80AA(4) from the assessable income of the income company of the income year in respect of a loss or a part of a loss has no effect to the extent that the sum of the amount specified in the agreement and any amount specified in an agreement previously made under paragraph (6)(c) and any amounts specified in notices given under paragraph (6)(c) of this Act as in force immediately before 1 July 1992 or the commencement of the Taxation Laws Amendment (Self Assessment) Act 1992 , whichever is later by any company in relation to allowable deductions under subsection 79E(3) , 79F(6) , 80(2) , 80AAA(7) or 80AA(4) from that assessable income exceeds:

(a) in a case where the income company has not in the income year derived exempt income - the amount by which the assessable income of the income company of that year exceeds the allowable deductions (other than deductions allowable by virtue of this section) from that assessable income; or

(b) in a case where the income company has in the income year derived exempt income - the amount by which the sum of the assessable income of the income company of that year and the net exempt income of the income company of that year exceeds the allowable deductions (other than deductions allowable by virtue of this section) from that assessable income.

80G(8)   [Film income]  

An agreement under paragraph (6)(c) relating to the transfer to the income company of a right to an allowable deduction under subsection 79F(6) or 80AAA(7) from the assessable income of the income company of the income year in respect of a loss or part of a loss has no effect to the extent that the sum of the amount specified in the agreement and any amount specified in an agreement previously made under paragraph (6)(c) and any amounts specified in notices given under paragraph (6)(c) of this Act as in force immediately before 1 July 1992 or the commencement of the Taxation Laws Amendment (Self Assessment) Act 1992 , whichever is later by any company in relation to allowable deductions under that subsection from that assessable income exceeds the sum of the net assessable film income within the meaning of section 79F or 80AAA , as the case requires, of the income company of that year and the net exempt film income within the meaning of that section of the income company of that year.

80G(9)   [When deduction not transferable]  

Where Subdivision B of Division 2A applies in relation to the loss company in relation to the loss year, the right to an allowable deduction in respect of any part of the loss incurred by the loss company in the loss year shall not be transferred to the income company in the loss year.

80G(9A)   [Losses incurred by PDF]  

If the loss company was a PDF throughout the last day of the loss year, the right to an allowable deduction in respect of any part of the loss incurred by the loss company in the loss year must not be transferred.

80G(9B)   [Non-PDF losses]  

However, if:

(a) the loss company became a PDF during the loss year and was still a PDF at the end of the loss year; and

(b) the loss company incurred a loss in the loss year otherwise than because of section 79EA ;

subsection (9A) does not apply to so much of the loss as does not exceed the loss (if any) that, if the period ( ``the notional year'' ) beginning at the start of the loss year and ending immediately before the loss company became a PDF were a year of income of the loss company, the loss company would be taken to incur in the notional year.

80G(10)   [Amount of loss available for transfer]  

Where the sum of the assessable income of the loss company of the income year and the net exempt income (if any) of the loss company of that year exceeds the allowable deductions, other than:

(a) deductions from that assessable income under section 79E , 79F , 80 , 80AAA , 80AA , 124AD , 124ADB , 124ADD , 124ADF or 159GC ;

(b) deductions from that assessable income under section 122D , 122DB , 122DD or 122DF where the loss company has not made an election under that section in relation to the year of income; or

(c) deductions from that assessable income under section 122DG , 122J , 122JE or 122JF or Division 10AA in respect of expenditure in relation to which the loss company has not made an election under section 122DG , 122J , 122JE , 122JF , 124ADH or 124AH , as the case requires, in relation to the year of income,

subsection (6) applies in relation to so much (if any) of the amount of a loss that is deemed to have been incurred by the loss company for the purposes of section 79E or 80 as is not allowable as a deduction from that assessable income under subsection 79E(3) , 79F(6) , 80(2) , 80AAA(7) or 80AA(4) .

80G(11)   [Transfer of losses in order incurred]  

Where the rights to allowable deductions in respect of 2 or more losses (other than film losses for the purposes of section 79F or 80AAA ) incurred by the loss company are able to be transferred under subsection (6), the rights to those deductions may be transferred under that subsection only in the order in which the losses were incurred.

80G(12)   [No deduction for transferred loss]  

Where the right to an allowable deduction in respect of a loss or a part of a loss is transferred to the income company under subsection (6), that loss or that part of that loss shall, for the purposes of the provisions of this Act other than this section, be deemed not to have been incurred by the loss company.

80G(13)   [Further agreement to transfer]  

Where the loss company makes an agreement in accordance with paragraph (6)(c) in relation to a part of a loss incurred by the loss company, that company must not make a further agreement in accordance with that paragraph in relation to that loss that purports to transfer to a company the right to an allowable deduction in respect of an amount that exceeds the amount obtained by deducting from the amount of that loss the amount of that part of that loss or the sum of the amounts of those parts of that loss specified in the first-mentioned agreement.

80G(14)   [Section 80A, 80B, 80DA and 80E not applicable]  

Where the right to an allowable deduction in respect of a loss or a part of a loss incurred by the loss company is transferred to the income company in the year of income in which the loss was incurred, sections 80A , 80B , 80DA and 80E do not apply in relation to -

(a) the loss company for the purposes of the operation of subparagraph (6)(d)(ii) in relation to that company; or

(b) the income company.

80G(15)   [Amendment of assessments]  

Where:

(a) the right to an allowable deduction in respect of a loss or a part of a loss incurred by the loss company is transferred to the income company pursuant to subsection (6); and

(b) that loss or a part of that loss was not deemed to have been incurred by the loss company,

nothing in section 170 prevents the amendment of an assessment of the income of the income company to disallow the whole or a part of the deduction referred to in paragraph (a).

80G(16)   [Retention of right to deduction]  

If, as a result of the amendment of an assessment or for any other reason, a deduction is not allowable from the assessable income of the income company in respect of the whole of an amount specified in an agreement under paragraph (6)(c) or specified in a notice given under paragraph (6)(c) of this Act as in force immediately before 1 July 1992 or before the commencement of the Taxation Laws Amendment (Self Assessment) Act 1992 , whichever is later, this section applies as if only that part of the amount specified in that agreement or that notice in respect of which a deduction is allowable to the company were so specified.

80G(17)   [Loss company a shareholder]  

If the loss company is a shareholder in the income company and receives any consideration from the income company for the transfer of the right to an allowable deduction to the income company under subsection (6):

(a) so much of the consideration as, in the opinion of the Commissioner, is given for the transfer of the right is not taken to be income derived by the loss company; and

(b) a capital gain does not accrue to the loss company because of the receipt of the consideration.

80G(18)   [Consideration for rights transfer]  

If the income company gives any consideration to the loss company for the transfer of the right to an allowable deduction to the income company under subsection (6):

(a) the consideration is not an allowable deduction to the income company; and

(b) the income company does not incur a capital loss because of the giving of the consideration.

80G(19)   [Interpretation]  

In this section, ``exempt income'' and ``net exempt income'' have the same respective meanings as in section 80 .