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  • 3 Transferred foreign source losses utilised

    Attention

    Warning:

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

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    Note: Do not include group foreign source losses-losses generated by a consolidated group-at item 3.

    This item requires information on the amount of transferred foreign source losses utilised. Transferred foreign source losses are foreign source losses that have been made outside the consolidated group and transferred into the group from an entity when it joins the group. A head company utilises a foreign source loss in respect of a class of assessable foreign income to the extent that the loss is taken into account in reducing the head company's income of that class.

    Show at labels I, L, O, R, U and X, as required, the TFNs of those joining entities that had foreign source losses from their loss bundles utilised applying the available fraction method. A bundle of losses consists of all the losses of a joining entity that are transferred to the head company at the same time.

    If foreign source losses have been utilised in respect of six or fewer than six loss bundles, complete the number of labels required. If foreign source losses have been utilised in respect of more than six loss bundles, show the joining entity TFNs for those loss bundles that had the six largest amounts of foreign source losses utilised.

    Show at labels J, M, P, S, V and Y, as required, the corresponding available fractions calculated for the loss bundles for joining entities whose TFNs are recorded at labels I, L, O, R, U and X, respectively. Each available fraction is to be completed to three decimal places (for example, 0.475, 0.520, 0.700).

    Where losses are transferred for the first time, the available fraction is calculated like this:

    A ÷ B

    Where:

    A is modified market value of the joining loss entity at the initial transfer time

    B is adjusted market value of the head company at the initial transfer time

    For details of how the modified market value of the joining loss entity and adjusted market value of the head company are determined see the information on Part E - Foreign source losses, item 2.

    Available fractions are calculated and then adjusted to three decimal places. The third decimal place is rounded up if the fourth decimal place is 5 or more.

    Where an available fraction has been adjusted as a result of certain events, for example, a new member joined the group and transferred a loss bundle, show the adjusted available fraction applicable at the end of the year of income.

    An available fraction cannot be a negative amount or greater than one. If the sum of the group's available fractions would total more than one, each available fraction is proportionally reduced. Refer to subsection 707-320(2) of ITAA 1997.

    For more information regarding the calculation of the available fraction, see the information on Part E - Foreign source losses, item 2.

    The available fraction for a foreign source loss is unaffected by the value donor rules. This means that where a value donor donates value to a loss company-the real loss-maker-the available fraction for a real loss-Note: maker's foreign source loss is the fraction that would have applied had value not been donated. Likewise, the available fraction for a value donor's foreign loss is what it would have been if the value donor had not donated some or all of its value to the real loss-maker. Therefore, a single loss bundle may have two relevant available fractions-one that applies to the bundles' foreign source losses and one that applies to its tax and net capital losses.

    Show at labels K, N, Q, T, W and Z, as required, the corresponding amount of transferred foreign source losses utilised from loss bundles of joining entities whose TFNs are recorded at labels I, L, O, R, U and X, respectively. The bundle amount may include foreign source losses utilised in relation to one or more classes of assessable foreign income. If foreign source losses have been utilised from more than six loss bundles, show the six largest amounts utilised.

    Example 21

    A consolidated group determines the following amounts of foreign source losses utilised from eight loss bundles for the 2002-03 income year:

    Co

    Transferor TFN

    Available fraction

    Foreign losses utilised ($)

    A

    111 111 111

    0.010

    40

    B

    222 222 222

    0.324

    4,200

    C

    333 333 333

    0.113

    2,300

    D

    444 444 444

    0.102

    5,500

    E

    555 555 555

    0.122

    700

    F

    666 666 666

    0.095

    850

    G

    777 777 777

    0.077

    1,300

    H

    888 888 888

    0.136

    1,800

    The head company completes part E, item 3 on the schedule as follows:

    Label

    Transferor TFN

    Label

    Available fraction

    Label

    Amount ($)

    I

    222 222 222

    J

    0.324

    K

    4,200

    L

    333 333 333

    M

    0.113

    N

    2,300

    O

    444 444 444

    P

    0.102

    Q

    5,500

    R

    666 666 666

    S

    0.095

    T

    850

    U

    777 777 777

    V

    0.077

    W

    1,300

    X

    888 888 888

    Y

    0.136

    Z

    1,800

    Information has been recorded for the loss bundles that had the six largest amounts of foreign source losses utilised.

    End of example
    Last modified: 30 Jul 2003QC 27493