Income Tax Assessment Act 1997



Division 165 - Income tax consequences of changing ownership or control of a company  

Subdivision 165-CD - Reductions after alterations in ownership or control of loss company  

Operative provisions

SECTION 165-115W   Calculation of trading stock decrease  


The question whether there is a trading stock decrease in relation to a company at an alteration time for a *CGT asset of the company that was an item of *trading stock at that time is worked out in this way. Method statement

Step 1.

Work out whether the item ' s *market value immediately before the alteration time was less than:

  • (a) if there was no earlier alteration time in the income year in which that alteration time occurred - the item ' s value under subsection 70-40(1) at the start of that income year or its cost if subsection 70-40(2) applies; or
  • (b) if there was an earlier alteration time or there were earlier alteration times in that income year - the item ' s market value immediately before that earlier alteration time or the later or latest of those earlier alteration times, as the case may be, or its cost if the company did not own it at that time.

  • Step 2.

    If the item ' s *market value immediately before the alteration time was less than:

  • (a) the item ' s value or cost referred to in paragraph (a) in step 1; or
  • (b) its market value or cost (as applicable) in paragraph (b) in step 1;
  • as the case requires, the difference is the trading stock decrease for the item.

    To the extent (if any) to which the difference reflects an amount counted at an earlier alteration time, do not count that amount again.


    Certain alteration times are disregarded (see subsections 165-115K(2) and (4)).


    Step 2 in the method statement in subsection (1) does not apply to an amount counted at an earlier alteration time if the company has chosen to use the *global method of working out whether it has an adjusted unrealised loss at that earlier time.

    However, a company does not have a trading stock decrease at an alteration time in respect of an item of *trading stock that it *acquired for less than $10,000.

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