Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

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

Subdivision 715-H - Cancelling loss on realisation event for direct or indirect interest in a member of a consolidated group  

SECTION 715-610   Cancellation of loss  

715-610(1)  
This section reduces to nil a loss that would otherwise be * realised for income tax purposes by a * realisation event that happens to an * equity or loan interest (the realised interest ) in an entity (the first entity ) when it is owned by another entity (the owner ), if the conditions in subsections (2) and (4) are met.

715-610(2)  
The first condition is that, at some time during the period (the ownership period ) when the owner owned the realised interest:


(a) the first entity was a * subsidiary member of a * consolidated group, and the owner was not a * member of the group; or


(b) the realised interest was an * external indirect equity or loan interest in a subsidiary member of a consolidated group; or


(c) the realised interest was an * equity or loan interest in an entity that, at that time:


(i) owned an equity or loan interest in a subsidiary member of a consolidated group; and

(ii) was not a member of the group; or


(d) the realised interest was an * equity or loan interest in an entity that owned at that time an external indirect equity or loan interest in a subsidiary member of a consolidated group; or


(e) all of these conditions are satisfied at that time:


(i) the realised interest was an equity or loan interest, an *indirect equity or loan interest or an external indirect equity or loan interest, in the *head company of a consolidated group;

(ii) the owner was not a member of the group;

(iii) the head company was an *eligible tier 1 company of a *top company.

715-610(3)  


An * equity or loan interest in an entity (the test entity ) is an external indirect equity or loan interest in a member of a * consolidated group if, and only if, neither the owner of the interest nor the test entity is a member of the group and:


(a) the test entity owns an equity or loan interest in the member; or


(b) the test entity owns an equity or loan interest that is an external indirect equity or loan interest in the member because of one or more other applications of this subsection.

715-610(4)  
The second condition is that, at the same or a different time during the ownership period:


(a) the owner was, or * controlled (for value shifting purposes), the * head company of a * consolidated group because of which the first condition is satisfied; or


(b) the owner was an * associate of an entity that, at the same or a different time during the ownership period, was, or controlled (for value shifting purposes), the head company of such a consolidated group.


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