ATO Interpretative Decision

ATO ID 2003/333 (Withdrawn)

Income Tax

Group company loss transfers: valid transfer agreement - income company not a group member during the loss year
FOI status: may be released

This ATO ID is withdrawn as it is a straight application of the law and does not contain an interpretative decision.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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 valid written agreement be made under Subdivision 170-A of the Income Tax Assessment Act 1997 (ITAA 1997) to transfer a tax loss where Income Company was in existence during the relevant loss year, but did not become a member of the same 'wholly owned group' as Loss Company until after the loss year?

Decision

No. Section 170-30 of the ITAA 1997 requires that Income Company must be a member of the same 'wholly-owned group' as Loss Company during not only the loss year but also the deduction year (and any intervening income year(s) if present).

Facts

Loss Company incurred a tax loss in the loss year.

Income Company was in existence at all times during the loss year. However it did not become a member of the same wholly-owned group as Loss Company until after the end of the loss year.

It is proposed that the tax loss incurred by Loss Company in the loss year be transferred to Income Company under Subdivision 170-A of the ITAA 1997 in respect of a later deduction year.

Reasons for Decision

Section 170-30 of the ITAA 1997 specifies the following conditions for the transfer of a tax loss under Subdivision 170-A of the ITAA 1997.

(1)

Both companies must be *in existence during at least part of each of the following income years:

(a): The *loss year; and
(b): *deduction year; and
(c): any intervening income year.

(2)

Also, both companies must be members of the same *wholly-owned group during the whole or part of those income years when both companies were *in existence.

Note: * denotes a term defined in section 995-1 of the ITAA 1997

Income Company was in existence at all times during the loss year. But it was not a member of the same 'wholly-owned group' with respect to the Loss Company at all times during the loss year. Therefore subsection 170-30(2) of the ITAA 1997 precludes the making of the proposed written agreement under Subdivision 170-A of the ITAA 1997.

Subdivision 170-A (sections 170-1 to 170-70) of the ITAA 1997 applies to assessments for the 1997-1998 income year and later income years.

Date of decision: 5 February 2003

Year of income: Year ended 30 June 2003

Legislative References:
Income Tax Assessment Act 1997
   Subdivision 170-A
   section 170-30
   subsection 170-30(2)
   Subdivision 975-W

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

Keywords
Group company transfers
Partial change of ownership
Losses

Business Line: Losses and CGT Centre of Expertise

Date of publication: 15 May 2003

ISSN: 1445-2782

history

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

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