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ATO Interpretative Decision

ATO ID 2003/501 (Withdrawn)

Income Tax

Deducting tax loss: saving rule - loss transfer
FOI status: may be released
  • This ATO ID is withdrawn as it is a straight application of the law and does not contain an interpretative decision.
    This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

In satisfying the conditions in subsection 170-35(3) of the Income Tax Assessment Act 1997 (ITAA 1997) concerning the eligibility of a loss company to transfer a tax loss, can the saving rule in subsection 165-12(7) of the ITAA 1997 be taken into account?

Decision

Yes. In determining whether a loss company would have been prevented from deducting the tax loss by Subdivision 165-A of the ITAA 1997, regard can be had to subsection 165-12(7) of the ITAA 1997.

Facts

Loss Company seeks to transfer a tax loss under Subdivision 170-A of the ITAA 1997 that it incurred in an earlier income year.

If Loss Company had enough assessable income, it would only have been able to deduct the loss if it had recourse to subsection 165-12(7) of the ITAA 1997, as otherwise it would not have satisfied the conditions in subsections 165-12(2), 165-12(3) and 165-12(4) of Subdivision 165-A of the ITAA 1997 due to section 165-165 of the ITAA 1997.

Reasons for Decision

To transfer a tax loss under Subdivision 170-A of the ITAA 1997, subsection 170-35(3) requires that the Loss Company must not have been prevented by Subdivision 165-A of the ITAA 1997 from deducting the tax loss in the deduction year, if it had enough assessable income to offset the tax loss.

In applying subsection 170-35(3) of the ITAA 1997, it is irrelevant that the Loss Company would only have satisfied Subdivision 165-A of the ITAA 1997 because of the saving rule in subsection 165-12(7) of the ITAA 1997.

Date of decision:  30 April 2003

Year of income:  Year ended 30 June 2002

Legislative References:
Income Tax Assessment Act 1997
   Subdivision 165-A
   subsection 165-12(1)
   subsection 165-12(2)
   subsection 165-12(3)
   subsection 165-12(4)
   subsection 165-12(7)
   section 165-165
   Subdivision 170-A
   subsection 170-35(3)

Keywords
Group company loss transfers

Business Line:  Losses and CGT Centre of Expertise

Date of publication:  27 June 2003

ISSN: 1445-2782

history
  Date: Version:
  30 April 2003 Original statement
You are here 19 March 2010 Archived

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