• Completing the schedule

    Page 1 of the schedule

    Tax file number (TFN)

    Write the TFN of the head company.

    Name of head company

    Print the name of the head company. The name shown must be the same as that shown on the head company's tax return.

    Australian business number

    Write the Australian business number (ABN), if any, of the head company.

    Part A Tax losses and net capital losses consolidated – excludes film losses

    Do not include tax losses or net capital losses of the complying superannuation class in Part A. Show these losses carried forward to later income years in Part D. Show these losses claimed as a deduction under section 320-141 of the Income Tax Assessment Act 1997 (ITAA 1997) in Life insurance companies taxation schedule - consolidated groups.

    1 Tax losses transferred from joining entities (including head company) at consolidation

    You only need to complete item 1 if your group consolidated during the 2015–16 income year.

    • Do not include net capital losses or film losses at item 1
    • Show net capital losses transferred from joining entities (including head company) at consolidation at item 6
    • Do not include tax losses if this item was completed in an earlier income year
    • For the definition of a tax loss, see section 995-1 of the ITAA 1997
    • Do not include tax losses transferred after consolidation; include these losses at item 2

    This item requires information on the amount of tax losses (excluding film losses) transferred from joining entities, including the head company, to the head company at the date the consolidated group has been brought into existence; that is, the date specified in the notice of choice given to the Commissioner of Taxation (Commissioner); see section 703-50 of the ITAA 1997.

    Write the relevant amount of tax losses transferred at consolidation at A, B or C, depending on which loss transfer test has been satisfied.

    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 tax loss for the period up to the time it joins the group. Generally, any unutilised carry forward tax losses are transferred to the head company if they could have been used by the joining entity, assuming sufficient income, in the 'trial year'. The trial year generally begins 12 months before joining the consolidated group and ends immediately after the joining time. In certain circumstances, the trial year may be a period shorter than 12 months; see subsection 707-120(2) of the ITAA 1997.

    Whether the tax 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 tax losses.

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

    Continuity of ownership test losses – companies only

    Write at A those tax losses that were transferred at consolidation because the continuity of ownership and control tests were satisfied for the ownership test period; that is, from the start of the year when the tax loss was incurred until immediately after the joining time.

    For more information on transfer testing and the continuity of ownership and control tests see:

    • section 165-12 of the ITAA 1997
    • section 165-15 of the ITAA 1997
    • Division 707 of the ITAA 1997.
    Same business test losses – companies only

    Write at B those tax losses that were transferred at consolidation where the continuity of ownership and control tests were failed, but the joining company satisfied the same business test.

    For more information, see:

    • section 165-13 of the ITAA 1997
    • section 165-210 of the ITAA 1997
    • Taxation Ruling TR 1999/9 - Income tax: the operation of sections 165-13 and 165-210, paragraph 165-35(b), section 165-126 and section 165-132
    • Taxation Ruling TR 2007/2 - Income tax: application of the same business test to consolidated and MEC groups - principally, the interaction between section 165-210 and section 701-1 of the Income Tax Assessment Act 1997.

    For more information on transfer testing and the same business test see Division 707 of the ITAA 1997.

    For more information about deducting and carried forward losses, see Losses.

    Other losses – trusts only

    Write at C those tax losses that were transferred at consolidation from a trust.

    See also:

    Example 1

    A consolidated group came into existence on 23 July 2015. During the 2015–16 income year, the following tax losses were transferred to the head company from joining entities that passed the loss transfer tests indicated.

     

    Joining entity

    Joining time

    Tax loss amount
    $

    Transfer test passed

    Continuity of ownership

    Same business

    Other

    Company A

    23/07/2015

    1,500

     

     

    Company B

    23/07/2015

    3,200

    X

     

    Company C

    03/02/2016

    4,600

     

     

    Fixed trust X

    23/07/2015

    1,800

     

     

    Non-fixed trust Y

    23/07/2015

    3,100

     

     

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

     Example of how the head company completes item 1 part A on the schedule

    End of example

    As Company C transferred its continuity of ownership tax losses after consolidation, the amount transferred is written at D item 2.

    2 Tax losses transferred from joining entities after consolidation

    • Do not include net capital losses or film losses at item 2
    • Show net capital losses transferred from joining entities after consolidation at item 7
    • Do not include tax losses transferred at consolidation; include these losses at item 1
    • Do not include tax losses transferred in an earlier income year
    • For the definition of a tax loss, see section 995-1 of the ITAA 1997

    This item requires information on the amount of tax losses (excluding film losses) transferred from joining entities to the head company after the date the consolidated group has been brought into existence; that is, the date specified in the notice of choice given to the Commissioner; see section 703-50 of the ITAA 1997.

    Write the relevant amount of tax losses transferred during the income year at D, E or F depending on which loss transfer test has been satisfied.

    Continuity of ownership test losses - companies only

    Write at D those tax losses that were transferred after consolidation because the continuity of ownership and control tests were satisfied from the start of the year, when the tax loss was incurred, until immediately after the joining time.

    Same business test losses - companies only

    Write at E those tax losses that were transferred after consolidation because the continuity of ownership and control tests were failed, but the joining company satisfied the same business test.

    Other losses - trusts only

    Write at F those tax losses that were transferred after consolidation by a trust. For more information on the trust loss legislation, see Schedule 2F to the Income Tax Assessment Act 1936 (ITAA 1936) and Trust loss provisions.

    Example 2

    A consolidated group came into existence on 1 July 2015. During the 2015–16 income year, the following tax losses were transferred to the head company from joining entities that passed the loss transfer tests indicated.

    Joining entity

    Joining time

    Tax loss amount
    $

    Transfer test passed

    Continuity of ownership

    Same business

    Other

    Company X

    01/07/2015

    1,800

    X

     

    Company Y

    02/07/2015

    2,300

    X

     

    Company Z

    03/02/2016

    7,800

     

     

    Fixed trust A

    08/06/2016

    1,100

     

     

    Non-fixed trust B

    08/06/2016

    4,500

     

     

    The head company completes item 2 part A on the schedule as follows:

     Example of how the head company completes item 2 part A on the schedule

    As Company X's same business tax losses were transferred at consolidation, the amount transferred is written at B item 1.

    End of example

    3 Tax losses deducted

    • Do not include net capital losses applied or film losses deducted at item 3.
    • Show net capital losses applied at item 8.
    • For the definition of a tax loss, see section 995-1 of the ITAA 1997.

    This item requires information on the amount of tax losses deducted (excluding film losses). A head company utilises a tax loss to the extent it is deducted from an amount of the head company's assessable income and net exempt income.

    The operation of the continuity of ownership test for transferred losses is modified by Subdivision 707-B of the ITAA 1997 and deduction of transferred tax losses is generally subject to an available fraction which limits the annual rate at which these losses may be recouped by the head company.

    For more information on the conditions applying to the continuity of ownership test, see sections 165-12 and 165-15 of the ITAA 1997.

    For more information on the same business test, see  

    • sections 165-13 and 165-210 of the ITAA 1997
    • Taxation Ruling TR 1999/9
    • Taxation Ruling TR 2007/2.

    For more information on ‘available fraction’ and how it is calculated, see Subdivision 707-C of the ITAA 1997.

    Group

    Write at G the amount of group tax losses deducted.

    Group tax losses are those tax losses that have been generated by the consolidated group. Group tax losses are effectively deducted before transferred tax losses.

    Transferred

    Write at I the amount of transferred tax losses deducted.

    Transferred tax losses are those tax losses that have been made outside the consolidated group and transferred into the group from an entity when it joined the group. Transferred tax losses deducted on a concessional basis are also included at I.

    Total

    Write at R the total of G and I.

    Transfer this amount to R Tax losses deducted item 7 on your Company tax return 2016.

    4 Transferred tax losses deducted

    Do not include transferred tax losses deducted in accordance with the concessional method. The concessional method is relevant for certain losses transferred before 1 July 2004 (see section 707-350 of the IT(TP)A).

    • Do not include group tax losses (losses generated by a consolidated group) deducted at item 4.
    • Do not include transferred net capital losses applied or film losses deducted at item 4.
    • Show transferred net capital losses applied at item 9.
    • For the definition of a tax loss, see section 995-1 of the ITAA 1997.

    This item requires information on the amount of transferred tax losses deducted, excluding net capital losses and film losses. A head company deducts a transferred tax loss to the extent it is deducted from an amount of the head company's assessable income or exempt income.

    Write at A, D, G, J, M and P, as required, the TFNs of those joining entities that had tax losses from their loss bundles deducted by 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 tax losses have been deducted for more than six loss bundles, write the joining entities' TFNs for the six loss bundles that had the largest amounts of tax losses deducted.

    Write at B, E, H, K, N and Q, as required, the corresponding available fractions calculated for the loss bundles for joining entities whose TFNs are recorded at A, D, G, J, M and P respectively. Each available fraction is to be completed to three decimal places, for example, 0.475, 0.520, 0.700. However, where rounding to three decimal places would result in an available fraction of nil, consolidated groups are permitted to round the available fraction to the first non-zero digit; see subsection 707-320(4) of the ITAA 1997. Where the available fraction is less than 0.0005, the amount of 0.000 should be written at the relevant label. Where the available fraction is equal to or greater than 0.0005, but less than 0.001, the fraction should be rounded up to 0.001.

    For details of how the available fraction is calculated, see Subdivision 707-C of the ITAA 1997.Write at C, F, I, L, O and R, as required, the corresponding amount of transferred tax losses deducted from loss bundles of joining entities whose TFNs are recorded at A, D, G, J, M and P, respectively.

    If tax losses have been deducted from more than six loss bundles, write the six largest amounts deducted.

    Last modified: 26 May 2016QC 48082