INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIA - CAPITAL GAINS AND CAPITAL LOSSES  

Division 3D - Anti-avoidance measures for capital losses of companies  

SECTION 160ZNT   CAPITAL GAIN ACCRUING TO COMPANY BECAUSE OF AVAILABLE CAPITAL LOSSES  

160ZNT(1)   [Commissioner may disallow]  

The Commissioner may disallow capital losses of a company (or parts of them) for a year of income if:

(a) a capital gain accrued to the company and some or all of the capital gain (the injected capital gain ) would not have accrued if the company had not incurred those capital losses; and

(b) the capital gain accrued in that year of income.

The disallowed capital losses and parts of capital losses may exceed the amount of the injected capital gain.

Note:

The disallowance may result in a net capital loss for the year of income (see section 160ZNX ).

160ZNT(2)   [When Commissioner cannot disallow]  

The Commissioner cannot disallow the capital losses or parts of the capital losses if the continuing shareholders will benefit from the accrual of the injected capital gain to an extent that the Commissioner thinks fair and reasonable having regard to their respective shareholding interests in the company.

160ZNT(3)   [References to losses]  

A reference to disallowing a capital loss or a part of a capital loss for a year of income is a reference to determining that a capital loss or a part of a capital loss, as the case may be, is not to be applied in determining whether a net capital gain has accrued, or a net capital loss is incurred, in respect of the year of income.

160ZNT(4)   [Continuing shareholders]  

The continuing shareholders are the individuals who have shareholding interests in the company both immediately before the injected capital gain accrued, and immediately afterwards.