Income Tax Assessment Act 1997
This Subdivision applies to a company if:
(a) a changeover time has occurred or occurs in relation to the company after the commencement time; and
(b) at the changeover time the company had an unrealised net loss (see section 165-115E ); and
(c) either of the following applies:
(i) the company makes a *capital loss, or apart from this Subdivision would be entitled to a deduction, in respect of a *CGT event that happens to a *CGT asset referred to in subsection (1A);
(ii) the company makes a *trading stock loss in respect of a CGT asset referred to in subsection (1A) that is an item of *trading stock; and
(d) the company would not, at the changeover time, satisfy the maximum net asset value test under section 152-15 .
The *CGT assets for the purposes of paragraph (1)(c) are:
(a) any CGT asset that the company owned at the changeover time; and
(b) any CGT asset that the company did not own at the changeover time but had owned at a previous time, where:
(i) a deferral event referred to in subsection 170-255(1) happened before the changeover time; and
(ii) the deferral event involved the company as the originating company referred to in that subsection; and
(iii) the deferral event would have resulted in the company making a *capital loss, or becoming entitled to a deduction, in respect of the CGT asset except for section 170-270 ; and
(iv) the company is not taken to have made a capital loss at or before the changeover time, or to have become entitled to a deduction at that time, under section 170-275 in respect of the asset.
A company may choose, for the purposes of the application of this Subdivision to it in respect of a particular changeover time, that every *CGT asset that has been acquired by it for less than $10,000 is to be disregarded.
However, the choice does not affect the application of the *global method of working out whether the company has an unrealised net loss (see subsection 165-115E(2) ).
A choice under subsection (1B) must be made on or before:
(a) the day on which the company lodges its *income tax return for the income year in which the relevant changeover time occurred; or
(b) such later day as the Commissioner allows.
A company is taken to have made a trading stock loss in respect of an asset that is an item of *trading stock if, and only if:
(a) one of the following applies:
(i) the company *disposes of the item;
(ii) the item stops being trading stock (within the meaning of section 70-80 );
(iii) the item is revalued under Division 70 ; and
(b) if subparagraph (a)(i) or (ii) applies - the item ' s *market value at the time when it is disposed of or stops being trading stock is less than:
(i) in respect of an item that has been valued under Division 70 - its latest value under the Division; or
(ii) otherwise - its cost at that time; and
(c) if subparagraph (a)(iii) applies - the item ' s value under the revaluation is less than:
(i) in respect of an item that has previously been valued under Division 70 - its latest value under that Division before the revaluation; or
(ii) otherwise - its cost at the time of the revaluation.
The difference worked out under paragraph (b) or (c), as the case may be, constitutes the amount of the *trading stock loss.
For the purposes of this Subdivision, the commencement time of a company is:
(a) if the company was in existence at 1 pm (by legal time in the Australian Capital Territory) on 11 November 1999 - that time; or
(b) if the company came into existence after that time - the time when it came into existence.
For the purposes of the application of this Subdivision to a company in relation to a particular time (the test time ), the reference time is:
(a) if no changeover time occurred in respect of the company before the test time - the commencement time; or
(b) otherwise - the time immediately after the last changeover time that occurred in respect of the company before the test time.
(a) 2 or more changeover times have occurred or occur in relation to a company; and
(b) the company owned a particular asset at more than one of those changeover times;
this Subdivision applies to the company in respect of that asset only in relation to the later or latest of those changeover times.