Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES

PART 3-90 - CONSOLIDATED GROUPS

View history reference

View history note

Division 719 - MEC groups

View history reference

View history note

Subdivision 719-F - Losses

View history reference

View history note

Maintaining the same ownership to be able to utilise loss

SECTION 719-260 Special test for utilising a loss because a company maintains the same owners

View history reference

Meeting the conditions in section 165-12

719-260(1)
The focal company is taken to meet the conditions in section 165-12 for the claim year and the loss if and only if the company (the test company ) identified in relation to the focal company in accordance with section 719-265 would have met those conditions for that year on the relevant assumptions in:

(a) section 719-270 (which is about assuming the test company made the loss for a particular income year); and

(b) section 719-275 (which is about assuming that nothing happened in relation to certain things that would affect whether the test company would meet those conditions); and

(c) section 719-280 (which is about assuming that the test company would have failed to meet those conditions in certain circumstances).

Focal company ' s failure to meet conditions in section 165-12

719-260(2)
The focal company is taken to fail to meet a condition in section 165-12 only at:

(a) the first time the test company would have failed to meet the condition on the relevant assumptions mentioned in subsection (1); or

(b) the ^* test time described in subsection 166-5(6) for the test company, if:

(i) Division 166 is relevant to working out whether the test company could have ^* utilised the loss for the claim year on the relevant assumptions mentioned in paragraphs (1)(a) and (b); and

(ii) the test company is not assumed under section 719-280 to fail to meet the condition before the test time.

View history reference

Note:

If the focal company is taken to fail to meet a condition in section 165-12 , the focal company will not be able to utilise the loss for the claim year unless the focal company meets the condition in section 165-13 by satisfying the business continuity test. That test applies to the focal company (and not the test company).

View history note

History

S 719-260(2) amended by No 7 of 2019, s 3 and Sch 1 item 145, by substituting " business continuity test " for " same business test " in the note, effective 1 April 2019 and applicable in relation to income years starting on or after 1 July 2015.

S 719-260(2) amended by No 164 of 2007 , s 3 and Sch 6 item 64, by omitting " (However, companies whose total income for the claim year is more than $100 million cannot satisfy the same business test for that year: see section 165-212A .) " after " (and not the test company). " in the note, applicable to:

(a) any tax loss that is incurred in an income year commencing on or after 1 July 2005; and

(b) any net capital loss that is made in an income year commencing on or after 1 July 2005; and

S 719-260(2) amended by No 147 of 2005.

S 719-260(2) amended by No 147 of 2005, s 3 and Sch 1 item 136, by substituting " subsection 166-5(6) " for " subsection 166-5(5) " in para (b), effective 14 December 2005. For application provision, see note under Div 166 heading.

S 719-260(2) amended by No 142 of 2003, s 3 and Sch 7 item 12, by substituting " condition " for " conditions " in the note.

Act No 142 of 2003, s 3 and Sch 7 item 15, contains the following application provision:

15(1)
The amendments apply to assessments for the 1997-98 income year and later income years.

15(2)
However, an amendment affecting a provision does not apply to anything to which the provision did not apply before the amendment.
Example: Section 707-125 of the Income Tax Assessment Act 1997 applies on and after 1 July 2002. Despite the reference in subitem (1) to the 1997-98 income year, the amendments of that section do not apply before 1 July 2002.

Business continuity test for focal company under Division 166

719-260(3)

View history reference

If subsection 166-5(5) affects whether the focal company can ^* utilise the loss for the claim year because the focal company is a ^* widely held company or an ^* eligible Division 166 company, or both, during the year, subsection 166-5(6) operates as if it required the *business continuity test to be applied to the ^* business the focal company carried on just before the time described in subsection (2) of this section.

View history note

Business continuity test for focal company to transfer loss

719-260(4)
If subsection 707-125(4) is relevant to working out whether the focal company can transfer the loss to a company under Subdivision 707-A , that subsection:

(a) has effect as if subsection 707-125(5) described the focal company ' s income year containing the time at which the focal company is taken under subsection (2) of this section to fail to meet a condition in section 165-12 ; and

(b) has effect despite subsection (3) of this section.

Note:

For working out whether certain losses can be transferred under Subdivision 707-A , subsection 707-125(4) modifies the operation of subsection 166-5(6) by extending the business continuity test period to include the income year described in subsection 707-125(5) .

View history note

Disclaimer and notice of copyright applicable to materials provided by CCH Australia Limited

CCH Australia Limited ("CCH") believes that all information which it has provided in this site is accurate and reliable, but gives no warranty of accuracy or reliability of such information to the reader or any third party. The information provided by CCH is not legal or professional advice. To the extent permitted by law, no responsibility for damages or loss arising in any way out of or in connection with or incidental to any errors or omissions in any information provided is accepted by CCH or by persons involved in the preparation and provision of the information, whether arising from negligence or otherwise, from the use of or results obtained from information supplied by CCH.

The information provided by CCH includes history notes and other value-added features which are subject to CCH copyright. No CCH material may be copied, reproduced, republished, uploaded, posted, transmitted, or distributed in any way, except that you may download one copy for your personal use only, provided you keep intact all copyright and other proprietary notices. In particular, the reproduction of any part of the information for sale or incorporation in any product intended for sale is prohibited without CCH's prior consent.