INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 3 - Deductions  

Subdivision A - General  

SECTION 63CA   WHEN TAX LOSSES RESULTING FROM BAD DEBTS CANNOT BE DEDUCTED  

63CA(1A)   [No application from 1998/99 year onwards]  

This section does not apply to the 1998-99 year of income or a later year of income.

Note:

Section 165-120 of the Income Tax Assessment Act 1997 deals with a company deducting in those income years a tax loss resulting from a bad debt.

63CA(1)   [Conditions on deduction of tax loss]  

If:

(a) a company can deduct a debt that is written off as bad in a year of income; and

(b) because of a change in the beneficial ownership of shares in the company or another company, the debt would not have been deductible in the year of income apart from subsection 63C(1) ; and

(c) the change occurred before the debt was written off as bad; and

(d) because the debt was deductible, the company has a tax loss, or there was an increase in the amount of its tax loss, for the year of income; and

(e) the Commissioner is satisfied that the company carried on a business during the year of income for the purpose (or for purposes including the purpose) of securing a deduction for the debt because of subsection 63C(1) ;

the company cannot deduct the tax loss, or cannot deduct it to the extent of the increase in the amount of the tax loss, in a later year of income unless:

(f) the company carried on, at all times during the later year of income, the same business as it carried on immediately before the change; and

(g) the company did not, at any time during the later year of income, derive income from a business of a kind that it did not carry on before the change, or from a transaction of a kind that it had not entered into in the course of business operations before the change.

63CA(2)   [Where part of debt is written off]  

If a part of a debt is written off as bad, subsection (1) applies as if the part were an entire debt that is written off as bad.

63CA(3)   [Where whole of debt is written off]  

This section has the same effect in relation to an allowable deduction under section 63E for the whole or part of a debt that is extinguished as it has in relation to an allowable deduction under section 63 of this Act or section 8-1 or 25-35 of the Income Tax Assessment Act 1997 for the whole or part of a debt that is written off as bad.