Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-5 - CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS  

Division 160 - Corporate loss carry back tax offset for 2020-21 or 2021-22 for businesses with turnover under $5 billion  

Subdivision 160-B - Loss carry back choice  

SECTION 160-35   Integrity rule - no loss carry back tax offset if scheme entered into  

No loss carry back tax offset if scheme entered into

160-35(1)  
The *corporate tax entity cannot *carry back an amount of a *tax loss to an income year (the gain year ) if:

(a)  there is a *scheme for a disposition of *membership interests, or an *interest in membership interests, in:


(i) the corporate tax entity; or

(ii) an entity that has a direct or indirect interest in the corporate tax entity; and

(b)  the scheme is entered into or carried out during the period:


(i) starting at the start of the gain year; and

(ii) ending at the end of the *current year; and

(c)  the disposition results in a change in who controls, or is able to control, (whether directly, or indirectly through one or more interposed entities) the voting power in the corporate tax entity; and

(d)  another entity receives, in connection with the scheme, a *financial benefit calculated by reference to one or more *loss carry back tax offsets to which it was reasonable, at the time the scheme was entered into or carried out, to expect the corporate tax entity would be entitled; and

(e)  having regard to the relevant circumstances of the scheme, it would be concluded that a person, or one of the persons, who entered into or carried out the scheme or any part of the scheme did so for a purpose (whether or not the dominant purpose but not including an incidental purpose) of enabling the corporate tax entity to get a loss carry back tax offset. Relevant circumstances

160-35(2)  
For the purposes of paragraph (1)(e), the relevant circumstances of the *scheme for a disposition include the following:

(a)  the extent to which the *corporate tax entity continued to conduct the same activities after the scheme as it did before the scheme;

(b)  if the corporate tax entity continued to use the same assets after the scheme as it did before the scheme - the extent to which those assets were assets for which equivalents were not readily available at the time of the scheme;

(c)  the matters referred to in subsection 177D(2) of the Income Tax Assessment Act 1936 (applying paragraph 177D(2)(d) as if the reference in that paragraph to Part IVA of that Act were instead a reference to this section). Application of this section to non-share equity interests

160-35(3)  
This section:

(a)  applies to a *non-share equity interest in the same way as it applies to a *membership interest; and

(b)  applies to an *equity holder in the same way as it applies to a *member.


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