Tax Laws Amendment (Loss Recoupment Rules and Other Measures) Act 2005 (147 of 2005)

Schedule 1   Loss recoupment rules for companies etc.

Income Tax Assessment Act 1997

76   At the end of Subdivision 165-E

Add:

165-212A Some companies cannot satisfy the same business test

For the purposes of this Division and Division 166, a company does not satisfy the *same business test for the whole or a part of the income year if the *total income of the company for the income year is more than $100 million.

Note: Section 165-212C sets out how to work out the total income of a company that is not able to work out its total income for a 12 month period.

165-212B Definition of total income

(1) The total income of a company for an income year is the total of the following:

(a) any *assessable income (other than any *net capital gains) *derived during the year by the company;

(b) any *exempt income derived during the year by the company;

(c) any *non-assessable non-exempt income derived during the year by the company.

(2) In working out the amount of a company's *non-assessable non-exempt income under paragraph (1)(c), do not include:

(a) any amount covered by section 17-5 (which is about GST); or

(b) any amount of non-assessable non-exempt income that is not included in the company's *assessable income because an equivalent amount has already been included in the company's assessable income (whether in that year or an earlier income year).

Note: For example, under section 70-90, the actual amount received for trading stock disposed of outside the ordinary course of business is not included in a company's assessable income because the market value of that stock has already been included in the company's assessable income.

165-212C Total income of companies who cannot work out their total income for a 12 month period

(1) This section sets out how to apply sections 165-212A and 716-805 if:

(a) the company does not exist for the whole income year; or

(b) the company is a *subsidiary member of a *consolidated group or a *MEC group for a part of the income year.

(2) The *total income of the company for the income year is the amount that the company reasonably estimates would be the total income if:

(a) the company were in existence for the whole of the income year; and

(b) the company were not a *subsidiary member of a *consolidated group or a *MEC group at any time during the year.

(3) This section applies instead of section 716-850 (which is about grossing up threshold amounts).

165-212D Restructure of MDOs etc.

(1) An *MDO does not fail to satisfy the *same business test merely because, before 1 July 2003:

(a) the MDO restructured the way it *provides medical indemnity cover; or

(b) the MDO ceased to provide medical indemnity cover;

in order to comply with the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003.

(2) A *general insurance company which is an *associate of an *MDO does not fail to satisfy the *same business test merely because, before 1 July 2003:

(a) the MDO restructured the way it *provides medical indemnity cover; or

(b) the MDO ceased to provide medical indemnity cover;

in order to comply with the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003.

165-212E Entry history rule does not apply for the purposes of the same business test

For the purposes of the *same business test, if an entity (the joining entity ) becomes a *subsidiary member of a *consolidated group or a *MEC group, section 701-5 (the entry history rule) does not operate to take the *business of the *head company of the group to include the business of the joining entity before it became a *member of the group.