INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART IIIA - CAPITAL GAINS AND CAPITAL LOSSES  

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

SECTION 160ZNV   SOMEONE ELSE OBTAINS A TAX BENEFIT BECAUSE OF A CAPITAL LOSS OR CAPITAL GAIN AVAILABLE TO COMPANY  

160ZNV(1)   [Commissioner may disallow]  

The Commissioner may disallow a deduction or a capital loss of a company if:

(a) a person (other than the company) has obtained or will obtain a tax benefit in connection with a scheme; and

(b) the scheme would not have been entered into or carried out if the company had not incurred some or all (the available expense ) of:

(i) the loss, outgoing or expenditure that the deduction is for; or

(ii) the capital loss;

as the case may be.

However, the deduction or capital loss may be disallowed only to the extent of the available expense.

160ZNV(2)   [Where capital gains accrue]  

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

(a) a person has obtained or will obtain a tax benefit in connection with a scheme; and

(b) the scheme would not have been entered into or carried out if some or all (the available capital gains ) of the capital gains that accrued to the company had not accrued:

(i) before it incurred the losses, outgoings or expenditure that the deductions were for, or the capital losses, as the case may be; and

(ii) in the same year of income as it incurred them.

The disallowed deductions or capital losses and parts of deductions or capital losses may exceed the amount of the available capital gains.

Note:

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

160ZNV(3)   [Where shareholding interest]  

The Commissioner cannot disallow under this section if:

(a) the person who has obtained or will obtain the tax benefit had a shareholding interest in the company at some time during the year of income; and

(b) the Commissioner considers the tax benefit to be fair and reasonable having regard to that shareholding interest.

160ZNV(4)   [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.

160ZNV(5)   [Interpretation]  

An expression means the same in this section as in Part IVA.