| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012374469788
This edited version of your ruling will be published in the public register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.
Ruling
Subject: company losses
Question:
Can the company transfer its losses to a sole individual director and shareholder to offset against future personal capital gains?
Answer:
No.
This ruling applies for the following period
Year ended 30 June 2009
Year ended 30 June 2010
Year ended 30 June 2011
Year ended 30 June 2012
The scheme commenced on
1 July 2008
Relevant facts
The company was set up to purchase and operate a business franchise.
An initial investment was made to purchase and set up the business and was funded through business loans and monies invested by the sole director/shareholder of the company.
The business operated for approximately three years at a loss and was sold in the 2011-12 financial year, making a capital loss.
The company has ceased all business activities.
Relevant legislative provisions
Income Tax Assessment Act 1997 Division 36
Reasons for decision
A company is a separate legal entity to its director/shareholders and the tax losses attach to the company not to the individual director/shareholder. There are no income tax provisions which allow for the transfer of tax losses from a company to an individual. Unless the losses can be transferred to a related company, once the company is wound-up, or deregistered, the losses will cease to exist.
While we appreciate your situation, there is no provision available that would allow the company to transfer its loss to an individual director/shareholder to offset against their own personal income or capital gains.