ATO Interpretative Decision

ATO ID 2003/124

general

Group company loss transfers: valid transfer agreement - single document with multiple agreements
FOI status: may be released

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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 loss company validly transfer various amounts of tax losses to two or more income companies in a single document (the Document) for the purposes of section 80G of the Income Tax Assessment Act 1936 (ITAA 1936)?

Decision

Yes. As the Document specifies the relevant right to an allowable deduction that is to be transferred for the purposes of section 80G of the ITAA, the fact that the Document incorporates several written agreements does not of itself invalidate those agreements.

Facts

The public officer of a loss company and the public officer of several income companies in a wholly owned group agreed for the loss company to transfer various amounts of tax loss incurred by the loss company to the several income companies for an income year that ended before 1 July 1997.

Rather than preparing a separate written agreement for each loss transfer, the public officer for the loss company and the public officer for the several income companies, incorporated the relevant written agreements for the purposes of paragraph 80G(6)(c) of the ITAA 1936 into the Document.

The Document was signed by the public officers of the loss company and the several income companies. It stated that various amounts of tax losses are transferred from the loss company to the income companies in accordance with the attached schedule.

The schedule specified for each loss transfer:

(i): the income year of the transfer,
(ii): the amount of tax loss being transferred,
(iii): the name of the loss company, and
(iv): the name of the income company.

Each written agreement that formed part of the Document was made within the requisite period specified in paragraph 80G(6A)(b) of the ITAA 1936.

In order to address the possibility that the loss company is subsequently found to have insufficient tax losses available to satisfy all of the several written agreements contained in the Document, the Document specified the order in which the tax loss agreements were entered into.

Reasons for Decision

Section 80G of the ITAA 1936 does not prescribe that the written agreement must be in any particular form.

Paragraph 80G(6A)(a) of the ITAA 1936 does, however, require that a transfer of a tax loss must be made by a written agreement and signed by the public officer of each of the loss company and the income company.

As the Document specifies the relevant right to an allowable deduction that is to be transferred for the purposes of section 80G of the ITAA, the fact that the Document incorporates several written agreements does not of itself invalidate those agreements.

Section 80G of the ITAA 1936 applies to assessments for the year ended 30 June 1997 and earlier income years.

Date of decision: 23 January 2003

Year of income: Year ended 30 June 2002

Legislative References:
Income Tax Assessment Act 1936
   section 80G
   paragraph 80G(6)(c)
   paragraph 80G(6A)(a)
   paragraph 80G(6A)(b)

Related Public Rulings (including Determinations)
Taxation Ruling TR 98/12

Related ATO Interpretative Decisions
ATO ID 2003/78
ATO ID 2003/121

Keywords
Losses CoE
Company losses
Group company loss transfers
Losses
Carry forward losses
Current year losses

Business Line: Losses and CGT Centre of Expertise

Date of publication: 15 March 2003

ISSN: 1445-2782

history

	Date:	Version:
You are here	23 January 2003	Original statement
	15 January 2010	Archived

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