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Edited version of private advice
Authorisation Number: 1051896650795
Date of advice: 9 September 2021
Ruling
Subject: Tax losses - change of ownership
Question
After the change of ownership, will the company be able to utilise the carried forward tax losses upon satisfaction of the same business test in Division 165 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes.
Division 165 of the ITAA 1997 allows a company to carry forward a tax loss indefinitely and to utilise it when they choose however, when there is a change of at least 50% in the ownership or control of a company, the company needs to satisfy the same business test (or similar business test, which applies to losses incurred in an income year beginning on or after 1 July 2015). In your circumstance, as the tax losses were incurred prior to 30 June 2015, you will need to satisfy the same business test. When satisfied, the new owners of the company will be able to utilise the carried forward tax losses. More information can be found on the ato.gov.au website by searching QC 45333.
This ruling applies for the following period:
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
M is the sole director and 100% shareholder of Company Pty Ltd (the Company).
The company has carried forward tax losses incurred prior to 30 June 20XX.
M intends to sell their 100% shareholding in the company to another identity. After the change in ownership, the company will continue to operate the business in the exact same form as it currently operates and trades.
Relevant legislative provisions
Income Tax Assessment Act 1997 Division 165