Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-90 - CONSOLIDATED GROUPS  

Division 707 - Losses for head companies when entities become members etc.  

Subdivision 707-A - Transfer of losses to head company  

Transfer of loss from joining entity to head company

SECTION 707-125   Modified business continuity test for companies ' post-1999 losses  

707-125(1)  
This section operates if:


(a) the joining entity made the loss for an income year starting after 30 June 1999; and


(b) section 165-13 or subsection 165-15(2) or (3) or 166-5(5) or (6) is relevant to working out (under section 707-120 ) whether the loss is transferred from the joining entity.

707-125(2)  


Work out whether the loss is transferred on the basis that section 165-13 required the joining entity to satisfy the *business continuity test for:


(a) the period (the business continuity test period ) consisting of:


(i) the * trial year; and

(ii) the income year that included the * test time worked out for section 165-13 for the joining entity (disregarding paragraph (b) of this subsection), if that income year started before the trial year; and


(b) the time (the test time ) just before the end of the income year for which the loss was made by the joining entity.

707-125(3)  
Work out whether the loss is transferred on the basis that:


(a) subsection 165-15(2) specified that the period (the business continuity test period ) for the *business continuity test consisted of:


(i) the * trial year; and

(ii) the income year in which the person began to control, or became able to control, the voting power in the company, if that income year started before the trial year; and


(b) subsection 165-15(3) required the business continuity test to be applied to the company ' s business immediately before the time (the test time ) just before the end of the income year for which the loss was made by the joining entity.

707-125(4)  
If Subdivision 166-A would apply to the joining entity for an income year consisting of the * trial year, work out whether the loss is transferred on the basis that:


(a) subsection 166-5(5) treated the joining entity as having satisfied the condition in section 165-13 if the joining entity satisfied the *business continuity test for the period (the business continuity test period ) consisting of:


(i) the trial year; and

(ii) the income year described in subsection (5) of this section, if that income year started before the trial year; and


(b) subsection 166-5(6) required the business continuity test to be applied to the * business that the joining entity carried on at the time (the test time ) just before the end of the income year for which the loss was made by the joining entity.

Note:

Subdivision 166-A applies to widely held companies and eligible Division 166 companies unless they choose that Subdivision 165-A apply to them without the modifications made by Subdivision 166-A .

707-125(5)  
For the purposes of subparagraph (4)(a)(ii), the income year is:


(a) the income year in which occurred the first time mentioned in subsection 166-5(6) ; or


(b) the income year of the joining entity containing the time at which the joining entity is taken under subsection 707-210(5) to fail to meet the condition in section 165-12 , if that subsection is relevant to working out whether the joining entity can * utilise the loss.

Note 1:

Section 707-205 affects the start of the test period if the joining entity made the loss under a previous operation of this Subdivision.

Note 2:

Section 707-210 is about whether a company can utilise certain losses transferred to it under this Subdivision from a company.

707-125(6)  
Subsection (4) of this section has effect despite subsection 707-210(6) .

Note:

Subsection 707-210(6) modifies section 166-5 for working out whether a company can utilise certain losses transferred to it under this Subdivision from a company.


 

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