Tax Law Improvement Act (No. 1) 1998 (46 of 1998)
Schedule 1 Amendment of the Income Tax Assessment Act 1997
3 Section 166-35 (link note)
Repeal the link note, substitute:
Subdivision 166-C - Deducting bad debts
Table of sections
166-40 How Subdivision 165-C applies to a listed public company
166-45 How Subdivision 165-C applies to a 100% subsidiary of a listed public company
166-50 Companies can choose that this Subdivision is not to apply to them
166-40 How Subdivision 165-C applies to a listed public company
(1) This Subdivision modifies the way Subdivision 165-C applies to a company that is a *listed public company at all times during a period (the test period) consisting of the *first continuity period, the *second continuity period and any intervening period.
Note 1: Subdivision 165-C is about the conditions a company must satisfy before it can deduct a bad debt.
Note 2: This Subdivision also modifies how Subdivision 165-C applies to a 100% subsidiary of a listed public company: see section 166-45.
Note 3: A company can choose that this Subdivision is not to apply to it: see section 166-50.
Substantial continuity of ownership
(2) The *listed public company is taken to have met the conditions in section 165-123 (about the company maintaining the same owners) if there is *substantial continuity of ownership of the company as between whichever of these times the company chooses:
(a) the start of the income year in which the debt was incurred;
(b) the start of the *test period;
and each of these other times in the test period:
(c) the time of each *abnormal trading in *shares in the company;
(d) the end of each income year.
See section 166-145 to work out whether there is substantial continuity of ownership.
No substantial continuity of ownership
(3) The *listed public company is taken to have failed to meet the conditions in section 165-123 if there is no *substantial continuity of ownership of the company as between the start of the *test period and one or more of the other times referred to in subsection (2).
Satisfies the same business test
(4) However, if the *listed public company satisfies the *same business test for the *second continuity period (the same business test period), it is taken to have satisfied the condition in section 165-126 (which is about the company carrying on the same business).
For the same business test: see Subdivision 165-E.
(5) Apply the *same business test to the *business that the *listed public company carried on immediately before the first time (the test time) covered by paragraph (2)(a) or (b) for which there was no *substantial continuity of ownership of the company as between the start of the test period and that time.
166-45 How Subdivision 165-C applies to a 100% subsidiary of a listed public company
(1) This Subdivision also modifies the way Subdivision 165-C applies to a company that is not a *listed public company, but only if the conditions in subsections (2) and (3) are met.
Note: Subdivision 165-C is about the conditions a company must satisfy before it can deduct a bad debt for an earlier income year.
(2) The company (the subsidiary) must be a *100% subsidiary of another company (the holding company) at all times during a period consisting of:
(a) the *first continuity period of the subsidiary; and
(b) the *second continuity period of the subsidiary; and
(c) any intervening period.
(3) Also, the *holding company must be a *listed public company at all times during that period.
(4) If the conditions are met then, for the purposes of applying Subdivision 165-C to the subsidiary, this Subdivision applies to the subsidiary as if:
(a) the subsidiary were itself a *listed public company at all times during that period; and
(b) an *abnormal trading in *shares in the *holding company during that period were an abnormal trading in shares in the subsidiary.
(Subdivisions 166-D, 166-F and 166-G apply to the subsidiary in the same way and for the same purpose.)
166-50 Companies can choose that this Subdivision is not to apply to them
(1) The *listed public company or subsidiary can choose that Subdivision 165-C is to apply to it for the income year without the modifications made by this Subdivision.
(2) The company must choose on or before the day it lodges its *income tax return for the income year, or before a later day if the Commissioner allows.