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Edited version of private ruling
Authorisation Number: 1011561184466
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Ruling
Subject: Application of Tax Losses
Question
Are taxation losses held by the transferee as at 31 December 2009, available to Entity X for the financial year ended 30 June 2010?
Answer: Yes
This ruling applies for the following period:
1 July 2009 to 30 June 2010
The scheme commences on:
1 January 2010
Relevant facts and circumstances
On 1 January 2010, a business satisfying the same business test, was transferred to the taxpayer, as regulated under the Financial Sector (Transfer of Business) Act 1999, federal legislation.
The transfer was considered a voluntary transfer whereby the Australian Prudential Regulatory Authority (APRA) issued the appropriate approval notices and certificates, effecting the transfer as required under the FSTB Act.
The transferee lodged a final income tax return for the period ended 31 December 2009 indicating a tax loss of $231,860.
Relevant Legislative Provisions
Financial Sector (Transfer of Business) Act 1999 Section 22.
Reasons for Decision
The Financial Sector (Transfer of Business) Act 1999 legislation provides that when the Australian Prudential Regulation Authority (APRA) issues a certificate of transfer the receiving body becomes the successor in law of the transferring body to the extent of the transfer. All assets and liabilities of the transferring body become assets and liabilities of the receiving body.
All duties, obligations, immunities, rights and privileges which applied to the transferring body, now apply to the receiving body.
Further, section 20 of this legislation provides that one or both of the merging bodies may provide APRA with a statement specifying things that are to happen in relation to assets and liabilities that are to be transferred. Section 20(2) enables APRA to approve the statement if APRA is satisfied that the statement has been agreed by both bodies and the matters specified in the statement are appropriate.
It is noted that in respect of the current matter that the parties appear to have satisfied all procedural and substantive provisions determined by APRA prior to lodgement of the section 20(1) statement with the regulatory authority. The statement was found satisfactory by APRA and was approved for transfer.
As the voluntary transfer under the Financial Sector (Transfer of Business) Act 1999, being a total transfer, was given approval by APRA, all assets and liabilities will be transferred to the transferor in accordance with section 22 of the aforementioned Act.
A tax loss is a future tax benefit. Hence, an asset of the transferring entity. As all assets and liabilities are transferred to the transferor on 1 January 2010, the tax loss held by the transferee as at 31 December 2009 is transferred and available for the financial year ended 30 June 2010.
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