Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-5 - CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS  

Division 166 - Income tax consequences of changing ownership or control of a widely held or eligible Division 166 company  

Subdivision 166-A - Deducting tax losses of earlier income years  

SECTION 166-5   How Subdivision 165-A applies to a widely held or eligible Division 166 company  

166-5(1)  
This Subdivision modifies the way Subdivision 165-A applies to a company that is:


(a) a *widely held company at all times during the income year; or


(b) an *eligible Division 166 company at all times during the income year; or


(c) a widely held company for a part of the income year and an eligible Division 166 company for the rest of the income year.

Note 1:

Subdivision 165-A is about the conditions a company must meet before it can deduct a tax loss for an earlier income year.

Note 2:

A company can choose that this Subdivision is not to apply to it: see section 166-15 .

Note 3:

See section 165-255 for the rule about incomplete income years.

Meaning of test period

166-5(2)  
The company ' s test period is the period consisting of the *loss year, the income year and any intervening period.

Note:

See section 165-255 for the rule about incomplete test periods.

Substantial continuity of ownership

166-5(3)  
The company is taken to have met the conditions in section 165-12 (which is about the company maintaining the same owners) if there is *substantial continuity of ownership of the company as between the start of the *test period and:


(a) the end of each income year in that period; and


(b) the *end of each *corporate change in that period.

Note:

See sections 166-145 and 166-175 to work out whether there is substantial continuity of ownership and a corporate change.

No substantial continuity of ownership

166-5(4)  
The company is taken to have failed to meet the conditions in section 165-12 if there is no *substantial continuity of ownership of the company as between the start of the *test period and:


(a) the end of an income year in that period; or


(b) the *end of a *corporate change in that period. Satisfies the business continuity test

166-5(5)  


However, if the company satisfies the *business continuity test for the income year (the business continuity test period ), it is taken to have satisfied the condition in section 165-13 .
Note 1:

For the business continuity test, see Subdivision 165-E .

Note 2:

See section 165-255 for the rule about incomplete test periods.

166-5(6)  


Apply the *business continuity test to the *business that the company carried on immediately before the earlier of the following times (the test time ):


(a) the end of the first income year;


(b) the first time in the test period that a *corporate change in the company *ends;

for which there is no *substantial continuity of ownership of the company as between the start of the *test period and that time.


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