Show download pdf controls
  • Section 3 Controlled foreign company losses



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

    End of attention

    Controlled foreign companies no longer quarantine revenue losses into separate classes of notional assessable income. However, controlled foreign company (CFC) losses continue to be quarantined in the CFC that incurred them.

    The amounts shown at M, N and O are the totals of the entity's share of losses incurred by CFCs. The entity's share of a loss of a CFC is calculated by applying its attribution percentage in the CFC to the loss of the CFC.

    Convertible CFC loss

    Under the transitional rules, a CFC is required to convert losses from the four classes of notional assessable income for each earlier statutory accounting period that have not yet been taken into account in one loss bundle.

    An eligible CFC will have a convertible CFC loss for an earlier statutory accounting period if:

    • it has an unrecouped loss under section 426 of the ITAA 1936 for the earlier period in relation to notional assessable income of a particular class
    • the loss was made in one of the 10 most recent statutory accounting periods ending before the commencement period (which is the first statutory accounting period starting on or after 1 July 2008), and
    • a loss remains after being reduced by certain amounts.

    See section 775-150External Link of the IT(TP)A.

    Convertible CFC losses

    Show at M the total of the entity's share of convertible CFC losses for the earlier statutory accounting periods.

    CFC losses deducted

    Show at N the total of the entity's share of convertible CFC losses, if any, that have been claimed as notional allowable deductions in calculating the CFC's attributable income for the statutory accounting period that ends within the 2008–09 income year.

    CFC losses carried forward

    Show at O the total amount of the entity's share of un-deducted CFC losses, if any, that are available to be carried forward to statutory accounting periods that end in later income years.

    Last modified: 27 Nov 2009QC 21731