Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-5 - CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS  

Division 175 - Use of a company's tax losses or deductions to avoid income tax  

Subdivision 175-CA - Tax benefits from unused net capital losses of earlier income years  

SECTION 175-40   When Commissioner can disallow net capital loss of earlier income year  

175-40(1)  


This Subdivision sets out cases where the Commissioner may prevent a company, in working out its *net capital gain for an income year, from applying some or all of a *net capital loss it has for an earlier income year (or of part of one) (the excluded loss ). This is called disallowing the excluded loss.
Note:

A company ' s net capital gain for an income year is usually worked out under section 102-5 .

175-40(2)  
However, the Commissioner cannot *disallow the *excluded loss if, in determining (under section 165-96 ) whether Subdivision 165-A would prevent the company from deducting the loss (or the part of the loss) for the income year if the loss were a *tax loss of the company for that earlier income year, the company:


(a) would fail to meet a condition in section 165-12 (which is about the company maintaining the same owners) in respect of the income year; but


(b) would meet the condition in section 165-13 in respect of the income year by satisfying the *business continuity test under section 165-210 .

Note:

Subdivision 165-A deals with the deductibility of a company ' s tax loss for an earlier income year if there has been a change in the ownership or control of the company in the period from the start of the loss year to the end of the income year.


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