INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)
This section does not apply to the 1998-99 year of income or a later year of income.
Section 165-120 of the Income Tax Assessment Act 1997 deals with a company deducting in those income years a tax loss resulting from a bad debt.
(a) a company can deduct a debt that is written off as bad in a year of income; and
(b) because of a change in the beneficial ownership of shares in the company or another company, the debt would not have been deductible in the year of income apart from subsection 63C(1) ; and
(c) the change occurred before the debt was written off as bad; and
(d) because the debt was deductible, the company has a tax loss, or there was an increase in the amount of its tax loss, for the year of income; and
(e) the Commissioner is satisfied that the company carried on a business during the year of income for the purpose (or for purposes including the purpose) of securing a deduction for the debt because of subsection 63C(1) ;
the company cannot deduct the tax loss, or cannot deduct it to the extent of the increase in the amount of the tax loss, in a later year of income unless:
(f) the company carried on, at all times during the later year of income, the same business as it carried on immediately before the change; and
(g) the company did not, at any time during the later year of income, derive income from a business of a kind that it did not carry on before the change, or from a transaction of a kind that it had not entered into in the course of business operations before the change. 63CA(2) [Where part of debt is written off]
If a part of a debt is written off as bad, subsection (1) applies as if the part were an entire debt that is written off as bad.63CA(3) [Where whole of debt is written off]
This section has the same effect in relation to an allowable deduction under section 63E for the whole or part of a debt that is extinguished as it has in relation to an allowable deduction under section 63 of this Act or section 8-1 or 25-35 of the Income Tax Assessment Act 1997 for the whole or part of a debt that is written off as bad.
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