FINANCIAL CORPORATIONS (TRANSFER OF ASSETS AND LIABILITIES) ACT 1993 (ARCHIVE)

SCHEDULE 2

NET CAPITAL LOSSES AND THE INCOME TAX ASSESSMENT ACT 1997

Part 2 - Addition of provisions at the end of Subdivision 170-B

Special rules for transfer from head company of consolidated group or MEC group

SECTION 170-175 (ARCHIVE) TRANSFER OF A NET CAPITAL LOSS MADE BY THE HEAD COMPANY BECAUSE OF SUBDIVISION 707-A

170-175(1)
The other sections of this Subdivision operate in relation to the actual or proposed transfer of a *net capital loss on the basis described in this section if:

(a) the *head company of a *consolidated group or *MEC group made the net capital loss because of Subdivision 707-A ; and

(b) the company (the real loss-maker ) that made the net capital loss apart from Subdivision 707-A is a *member of the group at the end of the income year for which it is proposed to transfer the loss under this Subdivision.

170-175(2)
The other sections of this Subdivision, except section 170-128 , operate as if:

(a) the *head company were a transferring corporation within the meaning of the Financial Corporations (Transfer of Assets and Liabilities) Act 1993 ; and

(b) the head company had made the *net capital loss for the income year for which the real loss-maker made the net capital loss (apart from Subdivision 707-A ).

Note:

This has the effect that (because of subsection 170-110(1) ) those sections operate as if the head company were the loss company and the capital loss year were the income year for which the real loss-maker made the loss.

170-175(3)
Section 170-128 operates as if:

(a) the real loss-maker were the *loss company; and

(b) section 701-1 (the single entity rule) could not affect whether the Financial Corporations (Transfer of Assets and Liabilities) Act 1993 would have applied to the transfer described in section 170-28 .

170-175(4)
Subsection 170-135(2) operates as if the reference in it to Subdivision 165-CA were a reference to that Subdivision as it operates given the effect of Subdivision 707-B , and Subdivision 719-F if relevant, on the operation of Subdivision 165-A .

Note:

Subdivision 165-CA determines whether a net capital loss can be applied by reference to whether Subdivision 165-A would permit the deduction of a tax loss for the same income year as the net capital loss. Subdivisions 707-B and 719-F affect the operation of Subdivision 165-A in relation to losses made by a company because of Subdivision 707-A .

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