ATO Interpretative Decision

ATO ID 2002/359 (Withdrawn)

Income Tax

Income Tax: Capital Gains Tax: transferring an individual's capital loss to a wholly-owned company
FOI status: may be released

This ATO ID is a straight application of the law and does not contain an interpretative decision

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Can a capital loss an individual taxpayer makes be transferred to a wholly-owned company under any provision of the Income Tax Assessment Act 1997 (ITAA 1997)?

Decision

No. There is no provision in the ITAA 1997 which allows a capital loss made by an individual to be transferred to a wholly-owned company.

Facts

An individual taxpayer acquired a number of assets on or after 20 September 1985, which consisted of shares, trust units and other financial instruments, held for investment purposes.

The taxpayer has transferred some of those assets to a wholly-owned company.

The taxpayer has retained some of the investment assets, comprising shares in a company that is in liquidation. The taxpayer expects to make a capital loss and proposes to transfer the capital loss to the wholly-owned company.

Reasons for Decision

There is no provision in the ITAA 1997 that would allow the transfer of a capital loss from an individual to a wholly-owned company.

Capital losses that a taxpayer makes in an income year are offset against any capital gains made during the income year (section 102-5 of the ITAA 1997). If the capital losses are not absorbed in this way, they are carried forward to future income years, to be offset against future capital gains (subsection 102-15(3) of the ITAA 1997).

Date of decision: 26 February 2002

Year of income: Year ending 30 June 2002

Legislative References:
Income Tax Assessment Act 1997
Section 102-5
subsection 102-15(3)

Keywords
Capital gains tax
Capital losses
CGT assets
Wholly-owned company

Business Line: Centres of Expertise Capital Gains Tax

Date of publication: 28 March 2002

ISSN: 1445-2782

history

	Date:	Version:
	26 February 2002	Original statement
You are here	16 March 2007	Archived

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