Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 707 - Losses for head companies when entities become members etc.  

Subdivision 707-A - Transfer of losses to head company  

Transfer of loss from joining entity to head company

SECTION 707-130   Modified pattern of distributions test  

707-130(1)    

This section operates for the purpose of working out (under section 707-120 ) whether the loss is transferred from the joining entity, if section 267-20 in Schedule 2F to the Income Tax Assessment Act 1936 is relevant for that purpose.

Note 1:

That section is relevant if the joining entity has been a non-fixed trust at any time in the period from the start of the income year in which the entity made the loss until the time it became a subsidiary member of the joined group (and was not an excepted trust at all times in the period).

Note 2:

That section prevents an entity from utilising a tax loss unless the entity meets the conditions in subsection 267-30(2) (if applicable) and section 267-35 in that Schedule by passing the pattern of distributions test for certain income years.

707-130(2)    
Section 267-30 in that Schedule has effect as if the income year mentioned in that section were the joining year, and not the ^* trial year.

Note:

Section 267-30 in that Schedule requires the joining entity to pass the pattern of distributions test for the income year mentioned in that section if that entity distributed income or capital in that income year or within 2 months after the end of that income year.

707-130(3)    
Section 267-35 in that Schedule has effect as if the reference in that section to an earlier income year were to an income year earlier than the joining year.

707-130(4)    
Disregard each distribution (if any) of income or capital (within the meaning of that Schedule) made by the joining entity after the joining time, so far as it was made from an amount of the entity ' s income or capital attributable to a time after the joining time, in working out:

(a) whether section 267-30 in that Schedule requires the joining entity to pass the pattern of distributions test (as defined in that Schedule); and

(b) whether the joining entity passes that test as required by section 267-30 or 267-35 in that Schedule.

Note:

Disregarding that percentage of a distribution may affect a test year distribution of income or a test year distribution of capital, as those terms are defined in section 269-65 in that Schedule, and thus affect whether the joining entity passes the pattern of distributions test under section 269-60 in that Schedule.