ATO Interpretative Decision

ATO ID 2004/499 (Withdrawn)

Income Tax

Group company loss transfers: excess franking offset converted into tax loss
FOI status: may be released

This ATOID is withdrawn from the database because it is a simple restatement of the law and does not contain an interpretative decision.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

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 corporate tax entity transfer a tax loss, for the 2002-03 year of income, resulting from an excess franking offset under section 36-55 of the Income Tax Assessment Act 1997 (ITAA 1997) where the conditions for transfer under Subdivision 170-A of the ITAA 1997, as then applied, are satisfied?

Decision

Yes. A tax loss resulting from an excess franking offset can be transferred under Subdivision 170-A of the ITAA 1997, as then applied, where the conditions for transfer are satisfied.

Facts

For the 2002-03 year of income, corporate tax entity (loss company) has an excess franking offset under section 36-55 of the ITAA 1997 which is converted into a tax loss.

Loss company wishes to transfer this tax loss to income company for the 2002-03 year of income. Both loss company and income company satisfy the conditions for transfer under Subdivision 170-A of the ITAA 1997 as then applied.

Reasons for Decision

Section 36-10 of the ITAA 1997 defines a tax loss and a loss year for the purposes of the income tax law including Subdivision 170-A of the ITAA 1997. Note 2 to section 36-10 provides that the meanings of tax loss and loss year are modified by section 36-55 of the ITAA 1997 (for the income year including 1 July 2002 and each later income year).

Section 36-55 of the ITAA 1997 provides for the conversion of an excess franking offset into a tax loss applying the method statement under subsection 36-55(2).

Subdivision 170-A of the ITAA 1997 as then applied for the 2002-03 year of income provided for the transfer of a tax loss from a loss company to an income company where the conditions for transfer are satisfied. This tax loss may represent a converted excess franking offset under the modified meaning of tax loss provided by section 36-55 of the ITAA 1997.

Date of decision: 15 June 2004

Year of income: Year ended 30 June 2003

Legislative References:
Income Tax Assessment Act 1997
   section 36-10
   section 36-55
   subsection 36-55(2)

Keywords
Group company loss transfers
Tax loss

Business Line: Losses and Capital Gains Tax Centre of Expertise

Date of publication: 18 June 2004

ISSN: 1445-2782

history

	Date:	Version:
	15 June 2004	Original statement
You are here	26 February 2010	Archived

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