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  • 1 Foreign source losses transferred from joining entities (including head company)-excludes losses of CFCs

    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

    Show at labels A, B, C and D the amounts of foreign source losses, if any, for each of the four classes of income that has been transferred from joining entities, including the head company, to the head company during the 2002-03 income year.

    When an entity joins a consolidated group as a subsidiary member part way through the entity's income year, it calculates its taxable income or loss for the period up to the time it joins the group. Generally, any unused carry forward losses are transferred to the head company if the losses could have been used by the joining entity, assuming sufficient income, in the 'trial year', which generally commences 12 months prior to joining the consolidated group and ends immediately after the joining time. In certain circumstances, the trial year may be a shorter period than 12 months. Refer to subsection 707-120(2) of ITAA 1997.

    Whether the losses could have been used by the joining entity in the trial year is determined by applying modified versions of the usual tests for deducting and applying losses.

    A joining entity is any eligible entity that joins a consolidated group. For details of who can and cannot be members of a consolidated group refer to sections 703-15 and 703-20 of ITAA 1997.

    Example 20

    A consolidated group comes into existence on 1 July 2002. During the 2002-03 income year foreign source losses are transferred to the head company from joining companies listed hereunder which satisfy the continuity of ownership and control transfer tests or the same business transfer test.

    Joining company

    Joining time

    Foreign loss related to class of assessable foreign income

    Interest $

    Modified passive ($)

    Offshore banking ($)

    All other ($)

    A

    1.7.2002

    3,400

    1,200

       

    B

    1.7.2002

    5,400

         

    C

    9.8.2002

     

    3,100

       

    D

    6.6.2003

         

    8,500

    The head company completes part E, item 1 on the schedule as follows:

    Interest income

    A

    8,800

    Modified passive income

    B

    4,300

    Offshore banking income

    C

     

    All other foreign source income

    D

    8,500

    Last modified: 30 Jul 2003QC 27493