Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES

PART 3-5 - CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS

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

Subdivision 165-B - Working out the taxable income and tax loss for the income year of the change

SECTION 165-25 Summary of this Subdivision

165-25(1)
The company calculates its taxable income for the income year in this way: Method statement

Step 1.

Divide the income year into periods: each change in ownership or control is a dividing point between periods.

Step 2.

Treat each period as if it were an income year and work out the notional loss or notional taxable income for that period.

Step 3.

Work out the taxable income for the year of the change by adding up:

• each notional taxable income; and

• any full year amounts (amounts of assessable income not taken into account at Step 2);

and then subtracting any full year deductions (deductions not taken into account at Step 2).

Do not take into account any notional loss.

165-25(2)
As well as a taxable income, the company will have a tax loss. It is the total of:

• each notional loss; and

• excess full year deductions of particular kinds.

165-25(3)
Special rules apply if the company was in partnership at some time during the income year.

For the special rules that apply if the company was in partnership: see sections 165-75 to 165-90 .