INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIA - CAPITAL GAINS AND CAPITAL LOSSES  

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

SECTION 160ZNU   DEDUCTION OR CAPITAL LOSS INJECTED INTO COMPANY BECAUSE OF AVAILABLE CAPITAL GAIN  

160ZNU(1)   [Commissioner may disallow]  

The Commissioner may:

(a) disallow a deduction of a company for a year of income to the extent that the company would not have incurred the loss, outgoing or expenditure that the deduction is for; or

(b) disallow a capital loss of a company for a year of income to the extent that the company would not have incurred the capital loss;

if some or all of a capital gain that accrued to it in the year of income had not accrued.

Note:

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

160ZNU(2)   [Deduction or capital loss that cannot be disallowed]  

The Commissioner cannot disallow any of the deduction or 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 incurring of the loss, outgoing or expenditure or of the capital loss, as the case may be; 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.

160ZNU(3)   [References]  

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.

160ZNU(4)   [Continuing shareholders]  

The continuing shareholders are the individuals who had shareholding interests in the company both immediately before the loss, outgoing or expenditure, or the capital loss, as the case may be, was incurred, and immediately afterwards.