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 170-142   If the gain company has become the head company of a consolidated group or MEC group  

170-142(1)  
The condition in subsection (2) of this section applies to the gain company instead of the condition in subsection 170-140(2) if the conditions in subsections 170-130(1) and (2) are met in relation to the *loss company and the gain company apart from section 170-133 and either:


(a) both these circumstances exist:


(i) after the start of the capital loss year but before the relevant time described in subsection 170-130(4) , the gain company became the *head company of a *consolidated group or of a *MEC group that came into existence after the start of the capital loss year;

(ii) the capital loss year and application year are not the same; or


(b) all these circumstances exist:


(i) the gain company is, at the relevant time described in subsection 170-130(4) , the head company of a MEC group;

(ii) before that time but after the end of the capital loss year, the MEC group was involved in an application event described in section 719-300 (but not covered by subsection 719-300(4) or (5));

(iii) the gain company would be taken under section 719-305 to have transferred losses to itself under Subdivision 707-A , assuming it had made losses while head company of the group or of a consolidated group involved in the event;

(iv) the MEC group or consolidated group came into existence before the start of the capital loss year.
Note:

An application event involves either expanding an existing MEC group by including extra eligible tier-1 companies of the top company for the group or creating a MEC group because more companies become eligible tier-1 companies of the top company of which the head company of a consolidated group is an eligible tier-1 company.

170-142(2)  
The gain company must have been able to apply the *net capital loss in working out its *net capital gain for the application year assuming that it had made the net capital loss for the capital loss year.

170-142(3)  
The condition in subsection (4) of this section applies to the gain company instead of the condition in subsection 170-140(2) if the conditions in subsections 170-130(1) and (2) are met in relation to the *loss company and the gain company because of section 170-133 .

170-142(4)  
The gain company must have been able to apply the *net capital loss in working out its *net capital gain for the application year assuming that it had made the net capital loss, for the income year in which the loss would have been transferred to it as described in paragraph 170-133(2)(c) , because of one or more transfers under Subdivision 707-A described in that paragraph.


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