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  • 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 2020–21.

    • 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.
    • Do not complete item 1 for tax losses transferred from joining entities (including head company) at consolidation if this occurred as a result of a special conversion event as described in subsection 719-120(1).

    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 or section 719-50 (whichever is applicable) of the ITAA 1997.

    When an entity joins a consolidated group as a subsidiary member part way through the entity's income year, it must work out its taxable income or tax loss for the period up to the time just before it joins the group.

    To the extent that any unused carry forward tax losses of the joining entity satisfy the transfer tests, which are modified versions of the usual tests for deducting tax losses, the unused carry forward tax losses may be transferred to the head company. Broadly, the transfer tests include additional test times (the 'trial year') and take into account certain necessary assumptions to facilitate their use as loss transfer tests, as the loss testing rules are normally only triggered when a loss is claimed. The trial year generally begins 12 months before joining the consolidated group and ends immediately after the joining time (or just before the joining time where the modified business continuity test is applied). In certain circumstances, the trial year may be a period shorter than 12 months. See section 707-120 of the ITAA 1997.

    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.

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

    A 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
    • Division 719 of the ITAA 1997.

    B Business continuity test losses – companies only

    The 'same business test' and the 'similar business test' are collectively referred to as the 'business continuity test'.

    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 business continuity test.

    For more information, see:

    • section 165-211 of the ITAA 1997
    • 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.
    • Law Companion Ruling LCR 2019/1 The business continuity test - carrying on a similar business

    For more information on transfer testing and the business continuity test, see Division 707 and Division 719 of the ITAA 1997.

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

    C 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 2020. During the 2020–21 income year, the following tax losses were transferred to the head company from joining entities that passed the loss transfer tests indicated.

    Tax losses transferable from joining entities to head company
    Tax losses transferable from joining entities to head company

    Joining entity

    Joining time

    Tax loss amount $

    Transfer test passed – continuity of ownership

    Transfer test passed – business continuity

    Transfer test passed – other

    Company A

    23/07/2020

    1,500

    Yes

    n/a

    n/a

    Company B

    23/07/2020

    3,200

    No

    Yes

    n/a

    Company C

    03/02/2021

    4,600

    Yes

    n/a

    n/a

    Fixed trust X

    23/07/2020

    1,800

    n/a

    n/a

    Yes

    Non-fixed trust Y

    23/07/2020

    3,100

    n/a

    n/a

    Yes

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

    Type of loss

    Label

    Amount
    $

    Continuity of ownership test losses

    A

    1,500

    Business continuity test losses

    B

    3,200

    Other losses - trusts only

    C

    4,900

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

    End of example

    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 or section 719-50 (whichever is applicable) of the ITAA 1997.

    For information about losses transferred by a joining entity, see also Tax losses transferred from joining entities (including head company) at consolidation.

    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.

    D 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.

    E Business continuity test losses – companies only

    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.

    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 business continuity test.

    F 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 2020. During 2020–21, the following tax losses were transferred to the head company from joining entities that passed the loss transfer tests indicated.

    Tax losses transferable from joining entities to head company
    Tax losses transferable from joining entities to head company

    Joining entity

    Joining time

    Tax loss amount $

    Transfer test passed – continuity of ownership

    Transfer test passed – business continuity

    Transfer test passed – other

    Company X

    01/07/2020

    1,800

    No

    Yes

    n/a

    Company Y

    02/07/2020

    2,300

    No

    Yes

    n/a

    Company Z

    03/02/2021

    7,800

    Yes

    n/a

    n/a

    Fixed trust A

    08/06/2021

    1,100

    n/a

    n/a

    Yes

    Non-fixed trust B

    08/06/2021

    4,500

    n/a

    n/a

    Yes

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

    Type of loss

    Label

    Amount
    $

    Continuity of ownership test losses

    D

    7,800

    Business continuity test losses

    E

    2,300

    Other losses - trusts only

    F

    5,600

    As Company X's business continuity 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 Subdivisions 707-B and 719-F 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 business continuity test, see:

    • sections 165-13, 165-210 and 165-211 of the ITAA 1997
    • Taxation Ruling TR 1999/9
    • Taxation Ruling TR 2007/2
    • Law Companion Ruling LCR 2019/1

    For more information on ‘available fraction’ and how it is calculated, see Subdivision 707-C and 719-F of the ITAA 1997.

    G 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.

    I 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.

    R 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 2021.

    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 Subdivisions 707-C and 719-F 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.

    5 Tax losses carried forward to later income years

    • Do not include net capital losses or film losses carried forward to later income years at item 5.
    • Show net capital losses carried forward to later income years at item 10.
    • For the definition of a tax loss, see section 995-1 of the 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 generally be retained for five years after the end of the income year in which the loss was fully deducted.

    If required, the head company must be able to demonstrate not only the balance of any tax losses being deducted or carried forward, but also how those tax losses arose and how the company was able to rely on the relevant loss utilisation tests.

    If you choose to carry back some or all of your tax losses at A, B and C item 13 Losses information in the Company tax return, this amount cannot be carried forward.

    S Group

    Write at S the amount of group tax losses carried forward to later income years under section 36-17 of the ITAA 1997. Group tax losses are those tax losses that have been generated by the consolidated group. The amount at S must be reduced by the amount of any losses carried back at A, B and C at 13 Losses information in the Company tax return.

    V Transferred

    Write at V the amount of transferred tax losses carried forward to later income years under section 36-17 of the ITAA 1997. 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. Any concessional transferred tax losses carried forward are also included at V.

    U Total

    Write at U the total of S and V.

    Transfer this amount to U item 13 Tax losses carried forward to later income years on your Company tax return 2021.

    The loss wastage rules apply in relation to amounts that are included in U item 13 on the Company tax return. For more information on how this amount is calculated, see Tax losses carried forward to later income years at 13 Losses Information in the Company tax return instructions 2021 (NAT 0669).

    6 Net capital losses transferred from joining entities (including head company) at consolidation

    You only need to complete item 6 if your group consolidated during 2020–21.

    • Do not include tax losses or film losses at item 6.
    • Show tax losses transferred from joining entities (including head company) at consolidation at item 1.
    • Do not include net capital losses transferred after consolidation; include these losses at item 7.
    • Net capital loss has the meaning given by sections 102-10 and 165-114 of the ITAA 1997.
    • Do not include net capital losses if this item was completed in an earlier income year.

    This item requires information on the amount of net capital 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; see section 703-50 or section 719-50 (whichever is applicable) of the ITAA 1997.

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

    A Continuity of ownership test losses – companies only

    Write at A those net capital 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 net capital loss was made until immediately after the joining time; see sections 165-96 and 707-120 of the ITAA 1997.

    B Business continuity test losses – companies only

    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.

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

    C Other losses – trusts only

    Write at C those net capital losses that were transferred at consolidation by a trust.

    Example 3

    A consolidated group came into existence on 10 March 2021. During 2020–21, the following net capital losses were transferred to the head company from joining entities that passed the loss transfer tests indicated.

    Net capital losses transferable from joining entities to head company
    Net capital losses transferable from joining entities to head company

    Joining entity

    Joining time

    Net capital loss amount
    $

    Transfer test passed – continuity of ownership

    Transfer test passed – business continuity

    Company A

    10/3/2021

    900

    No

    Yes

    Company B

    10/3/2021

    1,800

    Yes

    n/a

    Company C

     9/4/2021

    3,200

    Yes

    n/a

    Fixed trust X

    10/3/2021

    2,400

    n/a

    n/a

    Non-fixed trust Y

    10/3/2021

    1,100

    n/a

    n/a

    The head company completes item 6 part A on the schedule as follows:

    Type of loss

    Label

    Amount
    $

    Continuity of ownership test losses

    A

    $1,800

    Business continuity test losses

    B

    $900

    Other losses – trusts only

    C

    $3,500

    As Company C's continuity of ownership net capital losses were transferred after consolidation, the amount transferred is written at D item 7.

    End of example

    7 Net capital losses transferred from joining entities after consolidation

    • Do not include tax losses or film losses, at item 7.
    • Show tax losses transferred from joining entities after consolidation at item 2.
    • Do not include net capital losses transferred at consolidation; include these losses at item 6.
    • Net capital loss has the meaning given by sections 102-10 and 165-114 of the ITAA 1997.
    • Do not include net capital losses transferred in an earlier income year.

    This item requires information on the amount of net capital 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 or section 719-50 (whichever is applicable) of the ITAA 1997.

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

    D Continuity of ownership test losses – companies only

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

    E Business continuity test losses – companies only

    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.

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

    F Other losses – trusts only

    Write at F those net capital losses that were transferred after consolidation by a trust.

    Example 4

    A consolidated group came into existence on 1 July 2020. During 2020–21, the following net capital losses were transferred to the head company from joining entities that passed the loss transfer tests indicated.

    Net capital losses transferable from joining entities to head company
    Net capital losses transferable from joining entities to head company

    Joining entity

    Joining time

    Net capital loss amount
    $

    Transfer test passed – Continuity of ownership

    Transfer test passed – Business continuity

    Company X

    1/7/2020

    2,500

    No

    Yes

    Company Y

    2/7/2020

    300

    Yes

    n/a

    Company Z

    3/2/2021

    4,800

    No

    Yes

    Fixed trust A

    8/6/2021

    250

    n/a

    n/a

    Non-fixed trust B

    8/6/2021

    3,200

    n/a

    n/a

    The head company completes item 7 part A on the schedule as follows:

    Type of loss

    Label

    Amount
    $

    Continuity of ownership test losses

    D

    300

    Business continuity test losses

    E

    4,800

    Other losses – trusts only

    F

    3,450

    As Company X's business continuity net capital losses were transferred at consolidation, the amount transferred is written at B item 6.

    End of example

    8 Net capital losses applied

    • Do not include tax losses or film losses at item 8.
    • Show tax losses deducted at item 3.
    • Net capital loss has the meaning given by sections 102-10 and 165-114 of the ITAA 1997.
    • You may also need to complete a CGT schedule. For more information, see Guide to capital gains tax 2021 (NAT 4151).

    This item requires information on the amount of net capital losses applied. A head company applies a net capital loss to the extent that it is applied to reduce an amount of the head company's capital gains.

    Before applying a group net capital loss or a transferred net capital loss, a head company must pass the continuity of ownership and control tests or the business continuity test.

    The application of transferred net capital losses is generally subject to an available fraction which limits the annual rate at which these losses may be applied by the head company. For more information on ‘available fraction’ and its calculation see Subdivisions 707-C and 719-F of the ITAA 1997.

    G Group

    Write at G the amount of group net capital losses applied. Group net capital losses are those net capital losses that have been generated by the consolidated group. Group net capital losses are effectively applied before transferred net capital losses.

    I Transferred

    Write at I the amount of transferred net capital losses applied. Transferred net capital losses are net capital losses that have been made outside the consolidated group and transferred into the group from an entity when it joined the group. Transferred net capital losses applied on a concessional basis are also included at I.

    J Total

    Write at J the total of G and I.

    9 Transferred net capital losses applied

    • Do not include transferred net capital losses applied in accordance with the concessional method. The concessional method is relevant to certain losses transferred before 1 July 2004 (see section 707-350 of the IT(TP)A).
    • Do not include group net capital losses (losses generated by a consolidated group) applied at item 9.
    • Do not include transferred tax losses or film losses deducted at item 9.
    • Show transferred tax losses deducted at item 4.
    • Net capital loss has the meaning given by sections 102-10 and 165-114 of the ITAA 1997.

    This item requires information on the amount of transferred net capital losses applied. A head company applies a net capital loss to the extent that it is applied to reduce an amount of the head company's capital gains.

    Write at A, D, G, J, M and P, as required, the TFNs of those joining entities that had net capital losses from their loss bundles applied to reduce capital gains using 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 net capital losses have been applied for more than six loss bundles, write the joining entities' TFNs for the six loss bundles that had the largest amounts of net capital losses applied.

    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.

    Complete each available fraction 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 item. Where the available fraction is equal to or greater than 0.0005, but less than 0.001, the fraction is rounded up to 0.001.

    For more information about the calculation of the available fraction, see Subdivisions 707-C and 719-F of the ITAA 1997.

    Write at C, F, I, L, O and R, as required, the corresponding amount of transferred net capital losses applied from loss bundles of joining entities whose TFNs are recorded at A, D, G, J, M and P respectively.

    If net capital losses have been applied from more than six loss bundles, write the six largest amounts applied.

    10 Net capital losses carried forward to later income years

    • Do not include tax losses or film losses carried forward to later income years at item 10.
    • Write tax losses carried forward to later income years at item 5.
    • Net capital loss has the meaning given by sections 102-10 and 165-114 of the ITAA 1997.
    • The head company must keep a record of its net capital losses and account for any adjustments including those made by the ATO. These records must be retained for five years after a CGT event has occurred or the losses recouped, whichever is later.
    • If required, the head company must be able to demonstrate not only the balance of any net capital losses being applied or carried forward, but also how those net capital losses arose and how the company was able to rely on the relevant loss utilisation tests.

    S Group

    Write at S the amount of group net capital losses carried forward to later income years under section 102-15 of the ITAA 1997. Group net capital losses are those net capital losses that have been generated by the consolidated group.

    U Transferred

    Write at U the amount of transferred net capital losses carried forward to later income years under section 102-15 of the ITAA 1997. Transferred net capital losses are net capital losses that have been made outside the consolidated group and transferred into the group from an entity when it joined the group. Any concessional transferred net capital losses carried forward are also included at U.

    V Total

    Write at V the total of S and U.

    Transfer this amount to V item 13 Net capital losses carried forward to later income years on your Company tax return 2021.

    11 If you completed item 4 or item 9 in part A, were the apportionment rules applied?

    You must complete this item if:

    • transferred tax losses have been deducted, or
    • transferred net capital losses have been applied

    from any loss bundle applying the available fraction method.

    The use of transferred losses is apportioned if their available fraction applied for only part of the income year or when the available fraction changes during the income year. Apportionment applies if:

    • losses in a bundle are transferred to the head company by a subsidiary member that is joining part way through the head company's income year, or
    • available fractions are adjusted during the income year. Adjustments to available fractions are required if additional loss bundles are transferred to the head company at a later time or because there has been an injection of capital or a non-arm's length transaction; see subsection 707-320(2) of the ITAA 1997. In these cases, available fractions will have different numerical values for different periods of the income year.

    Apportionment in the first case ensures that a subsidiary's losses are only offset against income generated by the group after the subsidiary becomes a member.

    Apportionment in the second case ensures that an adjusted available fraction that is less than the previous fraction only applies from the date of the event that triggered the adjustment.

    If a consolidated group is formed part way through the head company's income year, the head company's use of its own prior year losses (transferred to itself under Subdivision 707-A of the ITAA 1997 on consolidation) will be unrestricted in respect of income broadly attributable to the pre-consolidation period. This is achieved by treating the losses actually incurred by the head company, which are subsequently transferred to itself at consolidation, as being in a bundle with an available fraction of 1 for the part of the head company's income year that is before the formation of the consolidated group.

    For more information, see section 707-335 of the ITAA 1997.

    • Print X in the appropriate box at W.
    Last modified: 27 May 2021QC 64887