ATO Interpretative Decision
ATO ID 2003/70 (Withdrawn)
Income Tax
Transfer of net capital loss - application of net capital lossFOI status: may be released
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This ATOID is a simple restatement of the law and is not an interpretative decision witin the meaning of PS LA 2001/8.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
Status of this decision: Decision Withdrawn 18 December 2009
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Where a net capital loss in a capital loss year preceding the application year is transferred under Subdivision 170-B of the Income Tax Assessment Act 1997 (ITAA 1997), can the loss be applied to an earlier year of income, which is not the application year, if the gain company has net capital gains in those years of income?
Decision
No. Pursuant to subsection 170-115(1) of the ITAA 1997 a transferred net capital loss can only be applied by the gain company in the application year.
Facts
The loss company incurred a net capital loss in the capital loss year ended 30 June 1999.
Pursuant to section 170-150 of the ITAA 1997, the loss company made a valid written agreement to transfer the net capital loss to the gain company for the application year ended 30 June 2002.
The gain company also derived net capital gains in the income years ended 30 June 2000 and 30 June 2001.
Reasons for Decision
Under subsection 170-120(1) of the ITAA 1997 the amount of net capital loss transferred to the gain company is taken to be a net capital loss of the gain company in the capital loss year, that is, the year ended 30 June 1999.
Subsection 170-115(1) of the ITAA 1997 provides that:
If an amount of a *net capital loss is transferred, the gain company can apply the amount in working out its *net capital gain, but only for the income year of the gain company for which the amount is transferred. That income year is called the
application year
.
*Denotes a term defined in section 995-1 of the ITAA 1997.
As the transferred net capital loss can only be applied in the application year, any net capital gains derived by the gain company in income years preceding the application year have no effect on the transferred net capital loss.
Date of decision: 21 November 2002Year of income: Year ended 30 June 2002
Legislative References:
Income Tax Assessment Act 1997
Subdivision 170-B
subsection 170-115(1)
subsection 170-120(1)
section 170-150
Related Public Rulings (including Determinations)
Taxation Ruling TR 98/12
Keywords
Group company loss transfers
ISSN: 1445-2782
| Date: | Version: | |
| 21 November 2002 | Original statement | |
| You are here → | 18 December 2009 | Archived |