Income Tax Assessment Act 1997



Division 715 - Interactions between this Part and other areas of the income tax law  

Subdivision 715-D - Treatment of company's deferred losses under Subdivision 170-D on joining a consolidated group  

Deferred loss on 165-CC tagged asset

SECTION 715-360   Deferred losses brought in by subsidiary member  

This section applies if, just before the time (the membership time ) when a company (the deferred loss company ) becomes a * subsidiary member of a * consolidated group, it had a * 170-D deferred loss that:

(a) it made on a * CGT asset that is a * 165-CC tagged asset of the company at the membership time because of paragraph 165-115A(1A)(b) (which covers CGT assets on which it has 170-D deferred losses); and

(b) as at the membership time has not * revived.

If a * loss denial pool of the * head company is created under subsection 715-70(2) because of the deferred loss company becoming a * subsidiary member of the group, each * 170-D deferred loss of that kind that the deferred loss company had just before the membership time is added to the loss denial pool at that time.

Otherwise, a loss denial pool of the * head company is created at the membership time if:

(a) the membership time is not a * changeover time for the head company; and

(b) the deferred loss company ' s * final RUNL just before the membership time (as reduced by any reductions under section 715-50 or 715-55 ) was greater than nil; and

(c) the deferred loss company does not satisfy the *business continuity test for:

(i) the period (the business continuity test period ) consisting of the deferred loss company ' s * trial year; and

(ii) the time (the test time ) just before the * changeover time.
Note 1:

The 170-D deferred losses become those of the head company at the formation time because of section 701-5 (Entry history rule).

Note 2:

Paragraph (3)(b) has the effect that if the deferred loss company has other 165-CC tagged assets affected by section 715-50 or 715-55 (because the membership time is when the group comes into existence, and the other 165-CC tagged assets are membership interests in, or accounting liabilities owed by, another group member), those sections are applied before this section.

When it is created because of subsection (3), the pool consists of each 170-D deferred loss covered by subsection (2), and its loss denial balance is equal to the * final RUNL referred to in paragraph (3)(b).


The pool is distinct from any other loss denial pool of the head company, for example, one created under this section because another entity becomes a subsidiary member of the group at the membership time.

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