ATO Interpretative Decision

ATO ID 2003/71 (Withdrawn)

Income Tax

Transfer of losses - deductibility of prior year losses
FOI status: may be released

This ATOID is a simple restatement of the law and is not an interpretative decision within the meaning of PS LA 2001/8.

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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

Where a tax loss from a loss year preceding the deduction year is transferred under Subdivision 170-A of the Income Tax Assessment Act 1997 (ITAA 1997) can the loss be deducted from an earlier year of income, which is not the deduction year, if the gain company has taxable income in those years of income?

Decision

No. Pursuant to subsection 170-20(1) of the ITAA 1997 a transferred tax loss is only deductible to the income company in the deduction year.

Facts

The loss company incurred a tax loss in the loss year ended 30 June 1999.

Pursuant to section 170-50 of the ITAA 1997 the loss company made a valid written agreement to transfer the tax loss to the income company for the deduction year ended 30 June 2002.

The income company had a taxable income in the income years ended 30 June 2000 and 30 June 2001.

Reasons for Decision

Under subsection 170-15(1) of the ITAA 1997 the amount of tax loss transferred to the income company is taken to be a tax loss incurred by the income company in the loss year ended 30 June 1999.

Subsection 170-20(1) of the ITAA 1997 provides that:

If an amount of a *tax loss is transferred, the *income company can deduct the amount in accordance with section 36-15 (which is about how to deduct a tax loss), but only for the income year of the income company for which the amount is transferred. That income year is called the deduction year .

*Denotes a term defined in section 995-1 of the ITAA 1997.

As the transferred tax loss is only deductible in the deduction year, any taxable income of the income company in income years preceding the deduction year has no effect on the transferred tax loss.

Date of decision: 21 November 2002

Year of income: Year ended 30 June 2002

Legislative References:
Income Tax Assessment Act 1997
   Subdivision 170-A
   subsection 170-15(1)
   subsection 170-20(1)
   section 170-50

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

Keywords
Group company loss transfers

Business Line: Losses and CGT Centre of Expertise

Date of publication: 15 March 2003

ISSN: 1445-2782

history

	Date:	Version:
	21 November 2002	Original statement
You are here	18 December 2009	Archived

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