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  • Part E Loss transfer details

    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

    Company only.

    Part E asks for information in relation to all losses transferred between group companies.

    The transferee (income or gain) company shows at:

    • item 1-Tax losses transferred in, the tax losses transferred to that income company by a group loss company
    • item 2-Net capital losses transferred in, the net capital losses transferred to that gain company by a group loss company

    The transferor (loss) company shows at:

    • item 3-Tax losses transferred out, the tax losses transferred out by that loss company to group income companies
    • item 4-Net capital losses transferred out, the net capital losses transferred out by that loss company to group gain companies

    Item 5-Consideration for transfer of loss asks whether or not any consideration was paid, credited or otherwise provided in respect of any of the losses transferred. This question is to be answered by both the transferor company and the transferee company.

    Note: If a tax loss or a net capital loss is transferred, both the transferee company and the transferor company must complete a Losses schedule and each company shows the details of the loss transfer at the appropriate labels as indicated below.

    Transfer of tax losses

    A group company may transfer the whole or a part of a tax loss to another group company where the conditions laid down in Subdivision 170-A of ITAA 1997 are satisfied.

    For more information refer to Taxation Ruling TR 98/12. To find out how to obtain a copy, see infolines page.

    These conditions include:

    • Both the loss company and the income company must satisfy the continuity of ownership or the same business test.
    • The loss company is an Australian resident and not a prescribed dual resident and not a dual resident investment company in either the loss year or the year in which the tax loss is transferred. Refer to section 170-35 of ITAA 1997.
    • The income company is a resident company but not a prescribed dual resident company in the income year when the tax loss is transferred. Refer to section 170-40 of ITAA 1997.
    • The income company has an excess of income over deductions for the income year in which the tax loss is to be transferred and that excess is equal to or greater than the amount of loss being transferred. Refer to section 170-20 of ITAA 1997.
    • Both the loss and income companies satisfy the common ownership test during the loss year and the deduction year and any intervening income years. One company must be a wholly owned subsidiary of the other or alternatively each of the 2 companies involved must be wholly owned subsidiaries of the same holding company. Refer to sections 170-30 and 975-500 of ITAA 1997.
    • The transfer is made under a written agreement between the loss company and the income company that (refer to section 170-50 of ITAA 1997)
      • specifies the income year of the transfer
      • specifies the amount of the tax loss being transferred
      • is signed by the public officer of each company
      • is made on or before the day of lodgment of the income company's tax return for the deduction year, or within such further time as the Commissioner allows.
       

    Note:

    • The tax loss transferred to the income company is deductible to the income company in accordance with the provisions of section 36-15 of ITAA 1997. For example, the tax loss transferred to the income company is first offset against the income company's net exempt income, then against its assessable income.
    • Tax losses transferred can never be used to create a tax loss.
    • Tax losses must be transferred in the order in which they were incurred. Refer to section 170-55 of ITAA 1997.
    • The income company can never transfer any amount of a tax loss transferred to it. Refer to section 170-60 of ITAA 1997.
    • Consideration received by the tax loss company for the tax loss transfer is neither assessable income nor exempt income of the loss company. Neither does a capital gain accrue to the loss company because of the receipt of the consideration. Refer to section 170-25 of ITAA 1997.
    • Consideration given by the income company for the tax loss transfer is not deductible to the income company. Neither does the income company incur a capital loss because of the giving of the consideration. Refer to section 170-25 of ITAA 1997.
    • The Commissioner has power in certain circumstances to amend assessments to disallow a deduction for an amount of transferred tax loss despite section 170 of ITAA 1936. Refer to section 170-70 of ITAA 1997.
    • GST may apply to certain loss transfers.

    For more information refer to label S-Tax losses transferred in in the Reconciliation statement of the Company tax return instructions. To find out how to obtain a copy, see infolines page.

    Subdivision 170-C of ITAA 1997 prevents the duplication of a tax loss or net capital loss transferred between wholly owned group companies where a CGT event happens to a direct or indirect interest in the company.

    It requires a reduction of the cost base and the reduced cost base of equity interests, and the reduced cost base of debt interests, held directly or indirectly in the loss company in certain circumstances. In some cases, the cost base and reduced cost base of interests held directly or indirectly in either the income or gain company (as applicable) is increased to reflect an increase in their market value because of the transferred loss. Increases are subject to other limitations when losses are transferred after 13 April 2000.

    If a subvention payment is made equal to the tax benefit of the loss, there is no cost base and reduced cost base increases. Subdivision 170-C of ITAA 1997 applies where tax losses or net capital losses are transferred under a written agreement made on or after 22 February 1999. In the case of tax loss transfers, cost base or reduced cost base adjustments are not required in respect of CGT events that happened in relation to shares or debts before 22 February 1999.

    Transfer of net capital losses

    A loss company can transfer a net capital loss to another company-the gain company-so that the gain company can apply that net capital loss in working out its net capital gain for the income year of the transfer. Both the loss company and the gain company must be members of the same wholly owned group. The transferred loss must be 'surplus' in the sense that, for the income year of the transfer, the transferring company does not have enough capital gains against which to apply it, whilst the other company-the gain company-does have enough capital gains against which to apply it. Refer to section 170-105 of ITAA 1997.

    Further requirements must be satisfied by the loss company and the gain company in relation to matters including residence of the loss company and the gain company, ownership and control of the loss company and the gain company, the making of a written agreement between the loss company and the gain company, the order in which net capital losses may be transferred and the adjustments to cost base. Refer to Subdivisions 170-B and 170-C of ITAA 1997.

    Where a company made a net capital loss in an earlier income year, it can only transfer the loss if the company would not have been prevented from applying the net capital loss under:

    • Subdivision 165-CA of ITAA 1997-applying net capital losses of earlier income years (ownership, control and same business rules), or
    • Subdivision 175-CA of ITAA 1997-tax benefits from unused net capital losses of earlier income years

    had it made enough capital gains in the loss transfer year-the application year.

    If a net capital loss was made by the transferring company in the 2001-2002 income year, the gain company must not have been required to calculate the net capital loss under either:

    • Subdivision 165-CB of ITAA 1997-working out the net capital gain and the net capital loss for the income year of the change. Refer to paragraph 170-135(2)(a) of ITAA 1997 or
    • Subdivision 175-CB of ITAA 1997-tax benefits from unused capital losses of the 2001 - 2002 income year. Refer to subsection 170-135(2) and section 175-75 of ITAA 1997.

    Capital losses from collectables cannot be transferred. For more information refer to subsection 170-105(1) of ITAA 1997.

    Net capital losses of a PDF are not transferable. For more information refer to sections 195-30 and 195-35 of ITAA 1997.

    Note: A CGT schedule may also need to be completed. For more information refer to the publication Guide to capital gains tax. To find out how to obtain a copy, see infoline page.

    1 Tax losses transferred in

    Note: Do not include net capital losses at item 1- see item 2.

    Transferor TFN

    Show at labels A, B and C the TFNs of those group companies that have transferred any tax losses to the company under Subdivision 170-A of ITAA 1997. If fewer than 3 companies have transferred tax losses to the company, complete the number of labels required. If more than 3 companies have transferred tax losses to the company, show the TFNs of the group companies that have transferred the 3 largest amounts of tax losses. If one company transfers tax losses to the income company under 2 or more loss transfer agreements, the total amount of the tax loss transfers is treated, for the purposes of completing the Losses schedule, as if the combined amount was the one loss transfer for the income year.

    Show at labels G, H and I, as required, the amount of tax losses transferred to the company by those group companies whose TFNs are recorded at labels A, B and C respectively.

    Other losses transferred in

    Show at label J the amount of the balance of any tax losses transferred to the company under Subdivision 170-A of ITAA 1997 by group companies. This amount is the total of tax losses transferred other than those tax loss transfers shown at labels G, H and I.

    Total (G +H +I +J)

    Show at label S the total of tax losses transferred to the company for the 2001-2002 income year, being the total of the amounts shown at labels G, H, I and J.

    Transfer the amount at label S to the corresponding label on your tax return.

    Note: The amounts shown at labels G, H, I, J and S are to be exclusive of GST. Where the relevant tax losses have been transferred between companies that are not members of a particular GST group, the amount of GST applicable to the tax loss transfer is not to be shown at these labels. Tax loss transfers between companies that are not members of a particular GST group are subject to GST.

    Note about the examples for part E, items 1,2,3 and 4:

    • All companies satisfied all of the appropriate tests for the tax losses and the net capital losses to be deducted and transferred.

    Example 12

    A company has tax losses transferred in from 2 group companies. The details of those loss transfers are as follows:

    Group company 1 (TFN 111 111 111)

    $700,000

    Group company 2 (TFN 222 222 222)

    $400,000

    Total tax losses transferred in

    $1,100,000

    The income (transferee) company completes part E, item 1 as follows:

    Label

    Transferor TFN

    Label

    Amount ($)

    A

    111 111 111

    G

    700,000

    B

    222 222 222

    H

    400,000

    C

    -

    I

    -

    -

    Other losses transferred in

    J

    -

    -

    Total (G + H + I + J)

    S

    1,100,000

    Transfer the amount at label S, $1,100,000 to the corresponding label on your tax return.

    End of example

     

    Example 13

    A company has tax losses transferred in from 5 companies. The details of those loss transfers are as follows:

    Group company 1 (TFN 111 111 111)

    $100,000

    Group company 2 (TFN 222 222 222)

    $600,000

    Group company 3 (TFN 333 333 333)

    $700,000

    Group company 4 (TFN 444 444 444)

    $200,000

    Group company 5 (TFN 555 555 555)

    $400,000

    Total tax losses transferred in

    $2,000,000

    The income company completes part E, item 1 as follows:

    Label

    Transferor TFN

    Label

    Amount ($)

    A

    111 111 111

    G

    600,000

    B

    222 222 222

    H

    700,000

    C

    555 555 555

    I

    400,000

    -

    Other losses transferred in

    J

    400,000

    -

    Total (G + H + I + J)

    S

    2,000,000

    Transfer the amount at label S, $2,000,000 to the corresponding label on your tax return.

    End of example

     

    Example 14

    At the end of the year, a number of loss transfers were made to the income (transferee) company. The details of those loss transfers are as follows:

    Group company 1 (TFN 111 111 111)

    $10 000

    Group company 2 (TFN 222 222 222)

    $16 000

    Group company 1 (TFN 111 111 111)

    $2 000

    Group company 3 (TFN 333 333 333)

    $28 000

    Group company 1 (TFN 111 111 111)

    $12 000

    Group company 4 (TFN 444 444 444)

    $20 000

    Group company 5 (TFN 555 555 555)

    $14 000

    Total tax losses transferred in

    $102 000

     

    Label

    Transferor TFN

    Label

    Amount ($)

    A

    222 222 222

    G

    28,000

    B

    111 111 111

    H

    24,000

    C

    444 444 444

    I

    20,000

    -

    Other losses transferred in

    J

    30,000

    -

    Total (G + H + I + J)

    S

    102,000

    Although each of the transfers from Group company 2, Group company 3, Group company 4 and Group company 5 were greater than the individual amounts transferred from Group company 1, the total of the losses transferred by Group company 1 were greater than those individual amounts transferred by Group company 2 and Group company 5.

    The transferee company completes part E, item 1 as follows:

    • Show at label A the TFN of Group company 3 (TFN 333 333 333).
    • Show at label G the amount of tax losses transferred in from Group company 3-that is, $28 000.
    • Show at label B the TFN of Group company 1 (TFN 111 111 111).
    • Show at label H the total amount of tax losses transferred in from Group company 1 under the 3 separate loss transfer agreements-that is, $24 000 ($10 000 + $2 000 + $12 000).
    • Show at label C the TFN of Group company 4 (TFN 444 444 444).
    • Show at label I the amount of tax losses transferred in from Group company 4-that is, $20 000.
    • Show at label J the total amount of tax losses transferred in from Group company 2 and Group company 5-that is, $30 000 ($16 000 + $14 000).
    • Show at label S the total amount of tax losses transferred in at labels G, H, I and J-that is, $102 000.

    Transfer the amount at label S, $102,000, to the corresponding label on your tax return.

    End of example

    2 Net capital losses transferred in

    Transferor TFN

    Show at labels D, E and F the TFNs of all group companies that have transferred net capital losses to the company under Subdivision 170-B of ITAA 1997. If fewer than 3 companies have transferred net capital losses to the company, complete the number of labels required.

    If more than 3 companies have transferred net capital losses to the company, show the TFNs of the group companies that have transferred the 3 largest amounts of net capital losses. If one loss company transfers net capital losses to the gain company under 2 or more loss transfer agreements, the total amount of the net capital losses transferred under the separate loss transfer agreements are, for the purposes of the completion of the Losses schedule, treated as if the total was transferred under the one loss transfer agreement for the year. Show at labels L, M and N, as required, the amount of net capital losses transferred by the group companies where TFNs are recorded at labels D, E and F respectively.

    Other losses transferred in

    Show at label O the amount of the balance of any net capital losses transferred to the company under Subdivision 170-B by group companies. This amount is the total of the net capital losses transferred other than those net capital loss transfers shown at labels L, M and N.

    Total (L +M +N +O)

    Show at label P the total of net capital losses transferred to the company for the 2001-2002 income year, being the total of the amounts shown at labels L, M, N and O.

    The amount at label P must equal the corresponding label on your CGT schedule, if one is required.

    Note: The amounts shown at labels L, M, N, O and P are exclusive of GST. Where the relevant net capital losses have been transferred between companies that are not members of a particular GST group, the amount of GST applicable to the net capital loss transfer is not to be shown at these labels. Net capital loss transfers between companies that are not members of a particular GST group are subject to GST.

    Example 15

    A gain company has net capital losses transferred in from 2 group loss companies as follows:

    Group company 1 (TFN 111 111 111)

    $300,000

    Group company 2 (TFN 222 222 222)

    $200,000

    Total tax losses transferred in

    $500,000

    The gain company completes part E, item 2 as follows:

    • Show at label D the TFN of Group company 1 (111 111 111)
    • Show at label L the amount of net capital losses transferred in from Group company 1-that is, $300,000.
    • Show at label E the TFN of Group company 2 (222 222 222)
    • Show at label M the amount of net capital losses transferred in from Group company 2-that is, $200,000.
    • Show at label P the total amount of net capital losses transferred in at labels L, M, N and O-that is, $500,000.

    Label

    Transferor TFN

    Label

    Amount ($)

    D

    111 111 111

    L

    300,000

    E

    222 222 222

    M

    200,000

    F

    -

    N

    -

    -

    Other losses transferred in

    O

    500,000

    -

    Total (L + M + N + 0)

    -

    -

    The amount at label P, $500,000, must equal the corresponding label on your CGT schedule, if one is required.

    End of example

     

    Example 16

    A gain company has net capital losses transferred in from 5 group loss companies, under separate agreements, as follows:

    Group company 1 (TFN 111 111 111)

    $300,000

    Group company 4 (TFN 444 444 444)

    $50,000

    Group company 2 (TFN 222 222 222)

    $200,000

    Group company 3 (TFN 333 333 333)

    $100,000

    Group company 4 (TFN 444 444 444)

    $350,000

    Group company 5 (TFN 555 555 555)

    $300,000

    Total tax losses transferred in

    $1,300,000

    The gain company completes part E, item 2 as follows:

    • Show at label D the TFN of Group company 1 (111 111 111)
    • Show at label L the amount of net capital losses transferred in from Group company 1-that is,$300 000.
    • Show at label E the TFN of Group company 4 (444 444 444)
    • Show at label M the total of the separate amounts of net capital losses transferred in from Group company 4 under the 2 separate loss transfer agreements-that is, $400 000 ($50 000 + $350 000).
    • Show at label F the TFN of Group company 5 (555 555 555)
    • Show at label N the amount of net capital losses transferred in from Group company 5-that is, $300 000.
    • Show at label O the total of net capital losses transferred in from Group companies 2 and 3-that is, $300 000 ($200 000 + $100 000).
    • Show at label P the total amount of net capital losses transferred in at labels L, M, N and O-that is, $1 300 000.

    Label

    Transferor TFN

    Label

    Amount ($)

    D

    111 111 111

    L

    300,000

    E

    222 222 222

    M

    400,000

    F

    555 555 555

    N

    300,000

    -

    Other losses transferred in

    O

    300,000

    -

    Total (L + M + N + O)

    P

    1,300,000

    Amount at label P, $1,300,000 must equal the corresponding label on your CGT schedule, if one is required.

    End of example

    3 Tax losses transferred out

    Transferee TFN

    Show at labels A, B and C the TFNs of all group companies to which the loss company has transferred tax losses under Subdivision 170-A of ITAA 1997.If fewer than 3 companies have transferred tax losses to the company, complete the number of labels required. If the loss company has transferred tax losses to more than 3 companies, show the TFNs of the group companies to which the loss company has transferred the 3 largest amounts of tax losses. If the loss company transfers tax losses to an income company under 2 or more loss transfer agreements, the total amount of the transfers is treated, for the purposes of completing the Losses schedule, as if the combined amount was the one loss transfer for the year.

    Show at labels G, H and I, as required, the amount of tax losses transferred out by the company to group companies where TFNs are recorded at labels A, B and C respectively.

    Other losses transferred out

    Show at label J the amount of the balance of any tax losses transferred out by the company under Subdivision 170-A of ITAA 1997 to group companies. This amount is the total of the tax losses transferred out other than those tax loss transfers shown at labels G, H and I.

    Total (G +H +I +J)

    Show at label Q the total of tax losses transferred out by the company for the 2001-2002 income year, being the total of the amounts shown at labels G, H, I and J.

    Note: The amounts shown at labels G, H, I, J and Q are to be exclusive of GST. Where the relevant tax losses have been transferred between companies that are not members of a particular GST group, the amount of GST applicable to the tax loss transfer is not to be shown at these labels. Tax loss transfers between companies that are not members of a particular GST group are subject to GST.

    Example 17

    A loss company transfers out tax losses to 2 group income companies as follows:

    Group company 1 (TFN 111 111 111)

    $900,000

    Group company 2 (TFN 222 222 222)

    $500,000

    Total tax losses transferred in

    $1,400,000

    The loss company completes part E, item 3 as follows:

    • Show at label A the TFN of Group company 1 (111 111 111).
    • Show at label G the amount of tax losses transferred out to Group company 1-that is, $900,000.
    • Show at label B the TFN of Group company 2 (222 222 222).
    • Show at label H the amount of tax losses transferred out to Group company 2-that is, $500,000.
    • Show at label Q the total amount of tax losses transferred out at labels G, H, I and J-that is, $1,400,000.

     

    Label

    Transferor TFN

    Label

    Amount ($)

    A

    111 111 111

    G

    900,000

    B

    222 222 222

    H

    500,000

    C

    -

    I

    -

    -

    Other losses transferred in

    J

    -

    -

    Total (G + H + I + J)

    S

    1,400,000

     

    End of example

     

    Example 18

    A loss company transfers out tax losses to 5 group income companies, under separate agreements, as follows:

    Group company 1 (TFN 111 111 111)

    $200,000

    Group company 2 (TFN 222 222 222)

    $500,000

    Group company 3 (TFN 333 333 333)

    $500,000

    Group company 4 (TFN 444 444 444)

    $300,000

    Group company 5 (TFN 555 555 555)

    $400,000

    Group company 2 (TFN 222 222 222)

    $100,000

    Total tax losses transferred in

    $2,000,000

    The loss company completes part E, item 3 as follows:

    • Show at label A the TFN of Group company 2 (222 222 222).
    • Show at label G the total amount of tax losses transferred out to Group company 2 under the 2 separate loss transfer agreements-that is, $600,000 ($500,000 + $100,000).
    • Show at label B the TFN of Group company 3 (333 333 333).
    • Show at label H the amount of tax losses transferred out to Group company 3-that is, $500,000.
    • Show at label C the TFN of Group company 5 (555 555 555).
    • Show at label I the amount of tax losses transferred out to Group company 5-that is, $400,000.
    • Show at label J the total amount of tax losses transferred out to Group companies 1 and 4-that is, $500,000 ($200,000 +$300,000).
    • Show at label Q the total amount of tax losses transferred out at labels G, H, I and J-that is, $2,000,000.

     

    Label

    Transferor TFN

    Label

    Amount ($)

    A

    222 222 222

    G

    600,000

    B

    333 333 333

    H

    500,000

    C

    555 555 555

    I

    400,000

    -

    Other losses transferred in

    J

    500,000

    -

    Total (G + H + I + J)

    S

    2,000,000

     

    End of example

    4 Net capital losses transferred out

    Transferee TFN

    Show at labels D, E and F the TFNs of all group companies to which the company has transferred net capital losses under Subdivision 170-B of ITAA 1997. If the company has transferred net capital losses to fewer than 3 companies, complete the number of labels required. If the company has transferred net capital losses to more than 3 companies, show the TFNs of the group companies to which the company has transferred the 3 largest amounts of net capital losses. If the loss company transfers net capital losses to a gain company under 2 or more loss transfer agreements, the total amount of the net capital losses transferred under the separate loss transfer agreements are, for the purposes of the completion of the Losses schedule, treated as if the total was transferred under the one loss transfer agreement for the year.

    Show at labels L, M and N the amount of net capital losses transferred out by the company to the group companies where TFNs are recorded at labels D, E and F respectively.

    Other losses transferred out

    Show at label O the amount of the balance of any net capital losses transferred out by the company under Subdivision 170-B of ITAA 1997 to group companies. This amount is the total of the net capital losses transferred out other than those net capital loss transfers shown at labels L, M and N.

    Total (L +M +N +O)

    Show at label K the total of net capital losses transferred out by the company for the 2001-2002 income year, being the total of the amounts shown at labels L, M, N and O.

    Note: The amounts shown at labels L, M, N, O and K are exclusive of GST. Where the relevant net capital losses have been transferred between companies that are not members of a particular GST group, the amount of GST applicable to the net capital loss transfer is not to be shown at these labels. Net capital loss transfers between companies that are not members of a particular GST group are subject to GST.

    Example 19

    A company transfers out net capital losses to 2 group gain companies as follows:

    Group company 1 (TFN 111 111 111)

    $400,000

    Group company 2 (TFN 222 222 222)

    $200,000

    Total tax losses transferred in

    $600,000

    The loss company completes part E, item 4 as follows:

    • Show at label D the TFN of Group company 1 (111 111 111).
    • Show at label L the amount of net capital losses transferred out to Group company 1-that is, $400,000.
    • Show at label E the TFN of Group company 2 (222 222 222).
    • Show at label M the amount of net capital losses transferred out to Group company 2-that is, $200,000.
    • Show at label K the total amount of net capital losses transferred out at labels L, M, N and O-that is, $600,000.

     

    Label

    Transferor TFN

    Label

    Amount ($)

    D

    222 222 222

    L

    400,000

    E

    111 111 111

    M

    200,000

    F

    -

    N

    -

    -

    Other losses transferred in

    O

    -

    -

    Total (L + M + N + 0)

    K

    600,000

     

    End of example

     

    Example 20

    A loss company transfers out net capital losses to 5 group gain companies as follows:

    Group company 1 (TFN 111 111 111)

    $700,000

    Group company 2 (TFN 222 222 222)

    $900,000

    Group company 3 (TFN 333 333 333)

    $500,000

    Group company 4 (TFN 444 444 444)

    $300,000

    Group company 5 (TFN 555 555 555)

    $100,000

    Total tax losses transferred in

    $2,500,000

    The loss company completes part E, item 4 as follows:

    • Show at label D the TFN of Group company 1 (111 111 111).
    • Show at label L the amount of net capital losses transferred out to Group company 1-that is, $700,000.
    • Show at label E the TFN of Group company 2 (222 222 222).
    • Show at label M the amount of net capital losses transferred out to Group company 2-that is, $900,000.
    • Show at label F the TFN of Group company 3 (333 333 333).
    • Show at label N the amount of net capital losses transferred out to Group company 3-that is $500,000.
    • Show at label O the total of net capital losses transferred out to Group companies 4 and 5-that is, $400,000 ($300,000 + $100,000).
    • Show at label K the total amount of net capital losses transferred out at labels L, M, N and O-that is, $2,500,000.

    Label

    Transferor TFN

    Label

    Amount ($)

    D

    111 111 111

    L

    700 000

    E

    222 222 222

    M

    900 000

    F

    -

    N

    500 000

    -

    Other losses transferred in

    O

    400 000

    -

    Total (L + M + N + O)

    K

    2 500 000

     

    End of example

    5 Consideration for transfer of loss

    Has any consideration been paid, credited or otherwise provided in respect of any loss transferred?

    Complete label R if any tax losses or net capital losses have been transferred either to or by the company.

    Print Y for Yes at label R, if any consideration-subvention receipt or payment (as applicable)-has been paid, credited or otherwise provided in respect of the loss transferred. If more than one loss transfer was made and subvention payments were either made or received (as applicable) in respect of only some of the losses transferred, print Y for Yes at label R.

    Print N for No at label R, if there has been no consideration-subvention receipt or payment (as applicable)-paid, credited or otherwise provided in respect of any amount of loss transferred.

    Example 21

    Subvention payments are made in respect of some of several transfers of various tax losses and net capital losses between the loss company and both the income company and the gain company.

    The loss company, the income and the gain company print Y for Yes at label R, in their respective Losses schedule if they were a party to the subvention payments. If one of the transferee companies was not a party to the subvention payments, that particular company prints N for No at label R, in its Losses schedule.

    End of example

    Part F Film losses

    Under Division 375-G of ITAA 1997 film losses may only be deducted from net exempt film income or net assessable film income-refer to subsection 375-815(1) of ITAA 1997. The rules in section 375-815 apply in addition to the other rules about how tax losses are applied, including the continuity of majority ownership and same business tests for companies, and the various tests set out in Schedule 2F to ITAA 1936 for trusts.

    Film losses are incurred where film deductions exceed the sum of assessable film income and net exempt film income.

    Film deductions are, subject to certain criteria being met, broadly those amounts that have been invested in qualifying Australian films, subject to certain criteria being met.

    Film income is broadly any amount derived as consideration for the use of, or in respect of the disposal of, interests in qualifying Australian films. Refer to section 26AG of ITAA 1936.

    Film losses may be transferred under Division 170-A of ITAA 1997 to the extent that the income company has net assessable film income and net exempt film income against which to apply those losses. Refer to special rules in subsection 170-45(3) of ITAA 1997.

    Film losses are deducted in priority to other tax losses of the same or earlier income years. Refer to section 375-820 of ITAA 1997.

    Film losses deducted

    Show at label S the amount of film losses deducted from net exempt film income or net assessable film income of the entity. This amount includes amounts transferred to, and deducted by, a company to which film losses have been transferred.

    Film losses carried forward to later income years

    Show at label T the amount of film losses carried forward by the entity to later income years.

    Example 22

    A company, satisfying the continuity of majority ownership test, incurs a film loss of $11,000 in the 1999-2000 income year. Subsequently in the 2001-2002 income year, it derives:

    • net assessable film income of $5,000
    • net exempt film income of $2,000, and
    • non-film assessable income of $7,000

    whereupon it seeks to deduct the earlier film loss.

    Calculate the carried forward film loss as follows:

    Film loss

    $11,000

    Less net exempt film income

    $2,000

    Net assessable film income

    $5,000

    Film loss carried forward to later income years

    $4,000

    The company must offset its film loss firstly against net exempt film income ($2,000) and then against net assessable film income ($5,000).

    The balance of the film loss ($4,000) is carried forward to later income years, as film losses may not be offset against non-film income.

    Show at label S the amount of film losses deducted-that is, $7,000.

    Show at label T the amount of film losses carried forward to later income years-that is, $4,000.

    End of example

     

    Example 23

    An income company, in the 2001-2002 income year, derives:

    • net assessable film income of $9,000
    • non-film assessable income of $14,000

    (It does not derive any net exempt film income.)

    A group company has previously incurred a film loss of $16,000 in the 1999-2000 income year. This loss may be validly transferred out to the income company under Subdivision 170-A of ITAA 1997. Subsequently in the 2001-2002 income year the group company transfers out the maximum film loss available for transfer ($9,000) to the income company. The remaining film loss ($7,000) is carried forward to later income years by the group company.

    The income company:

    Show at label S the amount of film losses deducted-that is, $9,000.

    The group company:

    Show at label T the amount of film losses carried forward to later income years-that is, $7,000.

    End of example
    Last modified: 09 Aug 2016QC 16568