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  • 5 Tax losses carried forward to later income years

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    Note:

    • Do not include net capital losses, foreign source losses or film losses carried forward to later income years at item 5.
    • Net capital losses carried forward to later income years are shown at item 10, and foreign source losses at Part E-Foreign source losses.
    • For the definition of a tax loss refer to section 995-1 of ITAA 1997.
    • The head company must keep a record of its tax losses and account for any adjustments including those made by the ATO. These records must be retained for five years after the end of the year in which the losses of the head entity were fully utilised.
    • If required, the head company must be able to demonstrate not only the balance of any tax losses being utilised or carried forward, but also how those tax losses arose.

    Group

    Show at label S the amount of group tax losses carried forward to later income years under section 36-15 of ITAA 1997. Group tax losses are those tax losses that have been generated by the consolidated group.

    Show transferred tax losses carried forward to later income years at either label T or V, as appropriate.

    Concessional

    Show at label T the amount of concessional tax losses carried forward to later income years under section 36-15 of ITAA 1997. Concessional tax losses are tax losses that meet certain conditions and may be utilised by the head company over three years, subject to the general loss recoupment tests as modified.

    For more information see the information on Part A - Tax losses and net capital losses consolidated, item 3.

    If the head company wishes to use the concessional method it must choose to do so by the day it lodges its income tax return for the income year in which it first uses any of its transferred losses. The choice, if made, must be for all eligible losses in a particular bundle. Where a head company has not made a choice whether to use the concessional method in respect of transferred losses meeting the relevant conditions, show the amount of these losses carried forward to later income years at label V.

    Other transferred

    Show at label V the amount of other transferred tax losses carried forward to later income years under section 36-15 of ITAA 1997. Other transferred tax losses are tax losses that have been made outside the consolidated group and transferred into the group from an entity when it joined the group. Where a choice has been made to use the concessional method in respect of eligible transferred losses, show the amount of these losses at label T.

    Total

    Show at label U the total of tax losses carried forward to later income years at labels S to V.

    Transfer the amount at label U to the corresponding label on your tax return.

    Example 6

    AAA consolidated group comes into existence on 1 July 2002. On that date tax losses of $2,500 are transferred to the head company from joining entities which satisfy the continuity of ownership and control transfer tests. No other losses are transferred to the head company. AAA group determines that $900 of the tax losses transferred satisfy the conditions for use of the concessional method and the head company makes a valid choice to apply this method for all the eligible losses. The balance of the losses transferred ($1,600) are to be utilised applying the available fraction method.

    For the 2002-03 income year, the head company of the AAA group is able to utilise $500 of the transferred tax losses-$300 using the concessional method and $200 using the available fraction method.

    The head company completes part A, item 5 on the schedule as follows:

    Label

    Code

    Amount ($)

    Group

    G

    0

    Concessional

    H

    600

    Other transferred

    I

    1,400

    Total

    R

    2,000

     

    End of example
    Last modified: 30 Jul 2003QC 27493