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Ruling
Subject: Modified same business test (SBT)
Question 1
Whether DCo, as head company of the DCo group, will be entitled to utilise the carry forward tax losses on the basis that the requirements of section 707-125 of the ITAA 1997 have been satisfied?
Answer
Yes
This ruling applies for the following periods:
1 July 2007 to 30 June 2012.
The scheme commences on:
2007
Relevant facts and circumstances
Originally, ACo was wholly-owned by BCo, which is part of the CCo consolidated group.
Later, DCo acquired a substantial stake in ACo. Thus, ACo exited the CCo consolidated group.
When ACo left CCo group, it had no tax losses. The tax losses only resulted from the period when DCo acquired an ownership stake in ACo.
DCo later increased its stake in ACo to 100%, such that ACo then joined DCo consolidated group.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 707-120
Income Tax Assessment Act 1997 Section 707-125
Reasons for decision
On the basis that ACo has satisfied all of the requirements pursuant to section 707-125 of the ITAA 1997, it is considered that DCo, as head company of the DCo group, will be entitled to utilise the carry forward tax losses made by ACo.