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  • Increasing access to company losses

    On 1 March 2019, legislation was passed that will supplement the current ‘same business test’ for business losses with a more flexible 'similar business test'. The new test will enable greater access to past year losses when businesses enter into new transactions or business activities.

    The similar business test

    The similar business test will allow businesses (and certain trusts) to access losses following a change in ownership where its business, while not the same, is similar having regard to:

    • the extent to which the assets that are used in its current business to generate assessable income were also used in its former business to generate assessable income
    • the extent to which the activities and operations from which its current business generated assessable income were also the activities and operations from which its former business generated assessable income
    • the identity of its current business and the identity of its former business
    • the extent to which any changes to the former business resulted from the development or commercialisation of assets, products, processes, services or marketing or organisational methods of the former business.

    As a test for accessing past year losses, the 'similar business test' will only be available for losses made in income years starting on or after 1 July 2015.

    The 'same business test' and the 'similar business test' will be collectively known as the 'business continuity test'.

    This law takes effect in relation to income years starting on or after 1 July 2015.

    Legislation and supporting material

    More information

      Last modified: 08 Jul 2019QC 47662