INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-5 - CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS  

Division 170 - Treatment of certain company groups for income tax purposes  

Subdivision 170-A - Transfer of tax losses within certain wholly-owned groups of companies  

Conditions for transfer

SECTION 170-42   If the income company has become the head company of a consolidated group or MEC group  

170-42(1)  
The condition in subsection (2) of this section applies to the *income company instead of the condition in subsection 170-40(2) if the conditions in subsections 170-30(1) and (2) are met in relation to the *loss company and the income company apart from section 170-33 and either:


(a) both these circumstances exist:


(i) after the start of the *loss year but before the relevant time described in subsection 170-30(4) , the income company became the *head company of a *consolidated group or of a *MEC group that came into existence after the start of the loss year;

(ii) the loss year and *deduction year are not the same; or


(b) all these circumstances exist:


(i) the income company is, at the relevant time described in subsection 170-30(4) , the head company of a MEC group;

(ii) before that time but after the end of the loss year, the MEC group was involved in an application event described in section 719-300 (but not covered by subsection 719-300(4) or (5));

(iii) the income company would be taken under section 719-305 to have transferred losses to itself under Subdivision 707-A , assuming it had made losses while head company of the group or of a consolidated group involved in the event;

(iv) the MEC group or consolidated group came into existence before the start of the *loss year.
Note:

An application event involves either expanding an existing MEC group by including extra eligible tier-1 companies of the top company for the group or creating a MEC group because more companies become eligible tier-1 companies of the top company of which the head company of a consolidated group is an eligible tier-1 company.

170-42(2)  
The *income company must have been able to deduct the *tax loss in the *deduction year assuming that it had incurred the tax loss for the *loss year.

170-42(3)  
The condition in subsection (4) of this section applies to the *income company instead of the condition in subsection 170-40(2) if the conditions in subsections 170-30(1) and (2) are met in relation to the *loss company and the income company because of section 170-33 .

170-42(4)  
The *income company must have been able to deduct the *tax loss in the *deduction year assuming that it had incurred the tax loss, for the income year in which the loss would have been transferred to it as described in paragraph 170-33(2)(c) , because of one or more transfers under Subdivision 707-A described in that paragraph.


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