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Where in relation to a particular tax loss the COT or control test is failed, or it is not practicable to show that the COT is satisfied, the loss can still be utilised if the same business test (SBT) is satisfied.
The SBT is satisfied if all of the following conditions are met throughout the prospective loss recoupment year:
A new type of transaction would be one:
Find out more
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 165-132External Link – for more information on the SBT, including a de minimus exception to the new business and new transaction tests.
The test time is:
Beetle Pty Ltd is an Australian company incorporated on 20 September 2001. The ultimate individual ownership of Beetle Pty Ltd is traceable. It made a tax loss in the 2002–03 income year. There was a change of 55% of the original ownership on 7 July 2003. It wishes to claim the loss in the 2005–06 year.
Beetle Pty Ltd will not satisfy the continuity of ownership test as it had a change in majority ownership or control during the ownership test period. It will only be able to claim the losses where it satisfied the same business test since the test time. The test time for the SBT is the date ownership or control changed. In this case, it is 7 July 2003.
Beetle Pty Ltd will only satisfy the same business test where it carries on the same business during the 2005–06 year that it carried on immediately before 7 July 2003.
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