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Edited version of your written advice
Authorisation Number: 1013096004631
Date of advice: 27 September 2016
Ruling
Subject: Transfer of losses
In order to protect the privacy and commercial in-confidence components of this private ruling, the following summary is provided.
The taxpayer is the head company of an income tax consolidated group and sought a ruling on the tax implications of an entity joining the income tax consolidated group.
The Commissioner ruled on the following issues:
• Certain losses failed the modified continuity of ownership test and therefore the losses could not be transferred to the income tax consolidated group under Subdivision 707-A of the Income Tax Assessment Act 1997 (ITAA 1997).
• Certain losses satisfied the modified same business test and therefore the losses could be transferred to the income tax consolidated group under Subdivision 707-A of the ITAA 1997.
• Section 707-205 of the ITAA 1997 operates so that losses that are transferred under Subdivision 707-A of the ITAA 1997 are treated as if the loss year started at the time of the transfer.
• A certain amount was reduced under subsection 707-325(3) of the ITAA 1997.
• An entity joined the income tax consolidated group on the day that the head company specified in the choice made under section 703-50 of the ITAA 1997 and notified to the Commissioner under section 703-58 of the ITAA 1997.
• The 'initial transfer time' under subsection 707-315(1) of the ITAA 1997 is the time when a certain subsidiary became a member of the income tax consolidated group.
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