INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-5 - CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS  

Division 170 - Treatment of certain company groups for income tax purposes  

Subdivision 170-B - Transfer of net capital losses within certain wholly-owned groups of companies  

Conditions for transfer

SECTION 170-133   Alternative test of relations between the loss company and other companies  

170-133(1)  
The conditions in subsections 170-130(1) and (2) are taken to be met in relation to the *loss company and the gain company if:


(a) the loss company is an Australian branch (as defined in Part IIIB of the Income Tax Assessment Act 1936 ) of a *foreign bank; and


(b) the gain company is covered by item 1 or 2 of the table in subsection 170-130(4) (because the company is the *head company of a *consolidated group or *MEC group at the time described in that item); and


(c) the relevant circumstances in this section exist. Circumstances

170-133(2)  


One circumstance is that there is another company (the first link company ) in relation to which all these conditions are met:


(a) the first link company became a *subsidiary member of a *consolidated group or *MEC group after the start of the capital loss year but before the time described in the item of the table in subsection 170-130(4) that covers the gain company;


(b) the *net capital loss could have been transferred from the *loss company to the first link company under this Subdivision (apart from subsection 170-130(4) and this section) for an application year consisting of the *trial year for the first link company becoming a subsidiary member of that group had:


(i) the first link company continued to be in existence as a separate entity (rather than being part of the head company of that group) when it was a subsidiary member of that group; and

(ii) the trial year not started before the start of the capital loss year; and

(iii) the first link company had enough *capital gains for the trial year;


(c) the net capital loss would have been made by the gain company because of one or more transfers under Subdivision 707-A assuming the net capital loss had been made by the first link company (apart from that Subdivision) for the capital loss year.

170-133(3)  


If the condition in paragraph (2)(c) could be met only if there had been a transfer described in that paragraph involving a company other than the first link company and the gain company, another circumstance is that the other company and the *loss company were in existence and members of the same *wholly-owned group for the period:


(a) starting when the *net capital loss would have been transferred under Subdivision 707-A to the other company as described in that paragraph; and


(b) ending when the net capital loss would have been transferred under Subdivision 707-A from the other company as described in that paragraph.

170-133(4)  
It does not matter whether or not any of the transfers mentioned in subsection (3) would have involved the first link company or the gain company as well as the other company.

170-133(5)  
Another circumstance is that the conditions in subsection 170-130(1) and (2) would have been met for the *loss company and the gain company assuming:


(a) the capital loss year consisted of the part of the income year in which the *net capital loss would have been transferred to the gain company under Subdivision 707-A as described in paragraph (2)(c) occurring after the time the transfer would have occurred; and


(b) so much (if any) of the application year as occurred before the time the transfer would have occurred were disregarded.


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