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  • Part F Tax losses reconciliation for consolidated groups

    This part requires you to reconcile the company's tax losses brought forward from the prior income year with those tax losses carried forward to later income years.

    Do not include net capital losses or film losses at this item.

    A Balance of tax losses brought forward from prior income year

    Write at A the amount of tax losses incurred by the company that have not been utilised and brought forward to 2020–21 under section 36-17 of the ITAA 1997. The balance of losses brought forward from prior income years includes tax losses that have not been utilised remaining within a bundle of losses; that is, tax losses transferred in a prior income year under Subdivision 707-A (including those with a nil available fraction).

    Any amount used as a loss carry back in the 2021 Company tax return will be subtracted at I Tax losses deducted.

    B Uplift of tax losses of designated infrastructure project entities

    A company, including the head company of a consolidated group, or a fixed trust that is a designated infrastructure project (DIP) entity in an income year is able to uplift its unutilised tax losses before deducting them. The tax losses are uplifted by the income year’s long-term bond rate, which is the year’s average yield for 10-year non-rebate Australian Treasury bonds.

    To be eligible for the uplift:

    • the project that you are undertaking must be designated; and
    • you must notify the Commissioner that you are a DIP entity.

    For more information, see Designated infrastructure project entities.

    If the head company is a DIP entity, write at B the amount of the uplift of tax losses as determined under Division 415 of the ITAA 1997.

    C Tax losses transferred from joining entities under Subdivision 707-A

    Write at C the amount of tax losses transferred from joining entities to the head company during 2020–21.

    Tax losses transferred from joining entities in prior years are included at A Balance of tax losses brought forward from the prior income year.

    L Transferred tax losses with a nil available fraction that have been applied

    Losses transferred to the head company of a consolidated group or a multiple entry consolidated group by a joining entity that is insolvent at the joining time can be utilised by the head company in certain circumstances. If relevant conditions are met, the head company can apply transferred losses with a nil available fraction to reduce a net forgiven amount under the commercial debt forgiveness rules, reduce a capital allowance adjusted under the limited recourse debt rules, and reduce the capital gain that arises under CGT event L5 when the joining entity subsequently leaves the group.

    For more information, see section 707-415 of the ITAA 1997.

    Write at L the amount of tax losses with a nil available fraction that have been applied to reduce:

    • a net forgiven amount under the commercial debt forgiveness rules
    • a capital allowance adjusted under the limited recourse debt rules, or
    • the capital gain that arises under CGT event L5 when the joining entity subsequently leaves the group.

    D Net forgiven amount of debt

    Tax losses brought forward and losses transferred from joining entities are reduced by any commercial debt forgiveness amounts, see Division 245 of the ITAA 1997. If a commercial debt owed by the company is forgiven during the income year, apply in the following order the net amount of debts forgiven to reduce the company's deductible revenue losses, net capital losses, certain undeducted revenue or capital expenditure, and the cost bases of CGT assets.

    A transferred loss with a nil available fraction can be used in certain circumstances by the head company of a consolidated group to reduce a net forgiven amount under the commercial debt forgiveness rules; see section 707-415 of the ITAA 1997. Do not include these amounts at this item. Include these amounts at item L.

    Write at D the total net forgiven amount applied to reduce tax losses (if any) incurred in years of income before the forgiveness year of income or to reduce tax losses transferred under Subdivision 707-A from joining entities in the current year.

    E Tax loss incurred (if any) during current income year

    Write at E the company's tax loss for 2020–21, disregarding net exempt income and excess franking offsets.

    There is a limit on the total of the amount you can deduct in the income year for gifts and contributions, see section 26-55 of the ITAA 1997. Deductions for gifts or contributions allowable under Division 30 of the ITAA 1997 cannot produce or increase a tax loss.

    F Tax loss amount from conversion of excess franking offsets

    If the company has excess franking offsets, it must convert the excess franking offsets into an amount of tax loss to carry forward to later income years. You convert the amount of excess franking offsets into a tax loss by dividing the excess franking offsets amount by the corporate tax rate.

    Write at F the amount of this tax loss.

    G Net exempt income

    Write at G the amount of net exempt income for 2020–21 to be taken into account in calculating your tax loss or carried forward tax loss.

    H Tax losses cancelled or forgone

    Write at H the amount of tax losses cancelled under section 719-325 of the ITAA 1997, or any losses that will not be deducted in any later income year.

    A company cannot deduct a tax loss unless:

    • it has the same owners and the same control throughout the period from the start of the loss year to the end of the income year, or
    • it satisfies the business continuity test by carrying on the same business, conducting no new kinds of business and entering into no new kinds of transactions - see Subdivision 165-A of the ITAA 1997.

    The 'same business test' and the 'similar business test' are collectively referred to as the 'business continuity test'. For more information, see LCR 2019/1 The business continuity test - carrying on a similar business.

    An eligible exploration company who:

    cannot deduct the converted tax loss. The loss must be cancelled.

    I Tax losses deducted

    Write at I the sum of:

    • the tax losses deducted during 2020–21 under section 36-15 or section 36-17 (as applicable) of the ITAA 1997, and
    • the total amount of losses carried back (the total amount recorded at A to C item 13 on the Company tax return) if not already included in the amount deducted under section 36-17 of the ITAA 1997.

    J Tax losses transferred out under subdivision 170-A (only for transfers involving a foreign bank branch or a PE of a foreign financial entity)

    Write at J the amount of tax losses transferred out by the company to group companies under Subdivision 170-A of the ITAA 1997.

    K Total tax losses carried forward to later income years

    The amount at K should be the same as the amount you calculated at R in Part A. Write at K the total of tax losses carried forward to later income years.

    Last modified: 27 May 2021QC 64887