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Legal database

Draft Taxation Determination

TD 93/D240

Income tax: does subsection 80A(1) require an unbroken compliance for the continuity of ownership test?

  • Please note that the PDF version is the authorised version of this draft ruling.
    This document has been finalised by TD 94/38.

FOI status:

draft only - for comment

Preamble

Draft Taxation Determinations (TDs) present the preliminary, though considered, views of the ATO. Draft TDs may not be relied on; only final TDs are authoritative statements of the ATO.

1. No. Subsection 80A(1) requires that there is sufficient identity in beneficial ownership of shares in the year of loss and the year of income. There is no specific requirement that the beneficial ownership continues unbroken from the year of loss to the year of income : see the remarks of Mason J. in FC of T v Kolotex Hosiery (1972-73) 130 CLR 64; 73 ATC 4094; (1973) 4 ATR 24.

Example:

During the year ended 30 June 1990, Company X incurred a loss. Its shares (all of one class) were more than 50% beneficially owned by A & B. During the income year ended 30 June 1991 C & D acquired all the shares of Company X. Subsequently A & B reacquired a greater than 50% beneficial shareholding in Company X on 30 June 1991 and retained their shareholding to 30 June 1992.
The continuity of ownership test is satisfied in the income year ended 30 June 1992. A & B together beneficially owned more than 50% of the shares in Company X in the year of loss and in the year of income.

Commissioner of Taxation
23 September 1993

References


BO PUL: 93/ A 28

ISSN 1038 - 8982

Subject References:
Losses
Continuity of Ownership

Legislative References:
ITAA 80A(1)

Case References:
FCT v Kolotex Hosiery
(1972-73) 130 CLR 64
73 ATC 4094
(1973) 4 ATR 24


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