Income Tax Assessment Act 1997
CHAPTER 3
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SPECIALIST LIABILITY RULES
PART 3-5
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CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS
Division 175
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Use of a company
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s tax losses or deductions to avoid income tax
Subdivision 175-CB
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Tax benefits from unused capital losses of the current year
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.
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.
The continuing shareholders are the individuals who had *shareholding interests in the company both immediately before the *capital loss was made, and immediately afterwards.
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.
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