ATO Interpretative Decision

ATO ID 2003/399 (Withdrawn)

Income Tax

Deferred capital loss or deduction: ceases to exist - more than one new event happens - time of new event
FOI status: may be released

This ATO ID is withdrawn from the database as it is a simple restatement of the law and does not contain an interpretative decision.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.

Status of this decision: Decision Withdrawn 19 September 2008

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Where more than one 'new event' (as defined in subsection 170-275(1) of the Income Tax Assessment Act 1997 (ITAA 1997)) happens after a 'deferral event' (as defined in paragraph 170-255(1)(a) of the ITAA 1997) is the time of the happening of each of the new events relevant for the purposes of subsection 170-275(1) of the ITAA 1997?

Decision

No. Only the time of the happening of the earliest of the new events is relevant for the purposes of subsection 170-275(1) of the ITAA 1997.

Facts

An 'originating company' (as defined in paragraph 170-255(1)(a) of the ITAA 1997) disposed of a CGT asset to another entity.

The disposal of the CGT asset resulted in section 170-255 of the ITAA 1997 applying. As a consequence, a capital loss that the originating company would otherwise have been entitled to was disregarded under section 170-270 of the ITAA 1997.

Subsequently, the relevant CGT asset acquired by the other entity was scrapped by disposing of it to a scrap metal dealer.

The scrap metal dealer is an entity that is none of those mentioned in subparagraphs 170-275(1)(b)(i), (ii) or (iii) of the ITAA 1997, so a new event happened for the purposes of paragraph 170-275(1)(b) of the ITAA 1997.

The scrap metal dealer later made the relevant CGT asset into molten metal which resulted in a new event happening for the purposes of paragraph 170-275(1)(a) of the ITAA 1997.

Reasons for Decision

Where a capital loss has been disregarded under section 170-270 of the ITAA 1997 the originating company is taken to have made an equivalent capital loss immediately before the time of the happening of the new event or the earliest of the new events, as the case may be, under section 170-275 of the ITAA 1997.

Therefore, only the time of the happening of the earliest of the new events is relevant for the purposes of subsection 170-275(1) of the ITAA 1997.

In this case, the time of the happening of the earliest of the new events is the time when the relevant CGT asset was acquired by the scrap metal dealer from the other entity.

Date of decision: 8 May 2003

Year of income: Year ended 30 June 2003

Legislative References:
Income Tax Assessment Act 1997
   Subdivision 170-D
   subsection 170-255(1)
   paragraph 170-255(1)(a)
   section 170-255
   section 170-270
   section 170-275
   subsection 170-275(1)
   paragraph 170-275(1)(a)
   paragraph 170-275(1)(b)
   subparagraph 170-275(1)(b)(i)
   subparagraph 170-275(1)(b)(ii)
   subparagraph 170-275(1)(b)(iii)

Keywords
Capital losses
Deferral event
Deferred capital losses
Disregarded capital loss
Losses and Capital Gains Tax CoE
Net capital losses
New event
Originating company
Realisation event
Relevant CGT asset

Business Line: Losses and CGT centre of Expertise

Date of publication: 23 May 2003

ISSN: 1445-2782

history

	Date:	Version:
	8 May 2003	Original statement
You are here →	19 September 2008	Archived

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