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-CB - Tax benefits from unused capital losses of the current year  

SECTION 175-65   Capital loss injected into company because of available capital gain  

175-65(1)  
The Commissioner may *disallow a *capital loss of a company for an income year to the extent that the company would not have made the loss if it had not also made some or all of a *capital gain it made in that income year.

Note:

The disallowance may result in a tax loss for the income year: see section 175-75 .

175-65(2)  

The Commissioner cannot *disallow any of the *capital loss if:

(a) the *continuing shareholders will benefit from any profit or advantage that has arisen or might arise directly or indirectly from the loss being made; and

(b) the Commissioner thinks that the extent to which they will benefit is fair and reasonable having regard to their respective *shareholding interests in the company.

Note:

Section 175-100 allows the Commissioner to disallow a capital loss of an insolvent company.

175-65(3)  
The continuing shareholders are the individuals who had *shareholding interests in the company both immediately before the *capital loss was made, and immediately afterwards.