INCOME TAX ASSESSMENT ACT 1936

SCHEDULE 2F - TRUST LOSSES AND OTHER DEDUCTIONS  

Division 267 - Income tax consequences for non-fixed trusts of change in ownership or control  

Subdivision 267-B - Deducting tax losses, and certain amounts in respect of debts, from earlier years  

SECTION 267-25   NON-FIXED TRUST MAY BE DENIED DEBT DEDUCTION  

Type of trust to which this section applies

267-25(1)  
This section applies to a trust that:


(a) can deduct in the income year an amount:


(i) under section 51 or 63 , or under section 8-1 or 25-35 of the Income Tax Assessment Act 1997 , in respect of the writing off of the whole or part of a debt, incurred in an earlier income year, as bad; or

(ii) under subsection 63E(3) or (4) in respect of a debt/equity swap relating to the whole or part of a debt incurred in an earlier income year; and


(b) was a non-fixed trust at any time in the period (the test period ) beginning on the day the debt was incurred and ending at the end of the income year; and


(c) was not an excepted trust at all times in the test period.

Note:

Subdivisions 709-D and 719-I of the Income Tax Assessment Act 1997 also affect when a trust that used to be a member of a consolidated group or MEC group may deduct a debt that used to be owed to a member of the group and that the trust writes off as bad.

Condition for deducting amount

267-25(2)  
The trust cannot deduct the amount unless it meets:

  • · the condition in subsection 267-30(2) (if applicable); and
  • · the condition in section 267-35 ; and
  • · the condition in subsection 267-40(2) (if applicable); and
  • · the condition in section 267-45 .

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