Commonwealth Consolidated Acts Commonwealth Consolidated ActsLoss company can only transfer what it cannot use itself
(1) The amount transferred cannot exceed what would be the amount of the * loss company's * unutilised * tax loss at the end of the * deduction year if the loss company utilised the tax loss to the greatest extent possible.
Transferred loss must not exceed what the income company can use
(2) The amount transferred also cannot exceed the amount worked out as follows:
Method statement
Step 1. Add together the * income company's assessable income and * net exempt income (if any) for the * deduction year.
Step 2. Subtract the * income company's deductions for the * deduction year, except deductions for amounts of * tax losses transferred to the income company (by the * loss company or any other company).
Step 3. Subtract the * income company's deductions for the * deduction year for amounts of * tax losses transferred to the income company (by the * loss company or any other company) by agreements made before the agreement by which the first amount is transferred.
Example: In the deduction year:
• the income company has assessable income of $60,000, net exempt income of $10,000 and deductions of $25,000 (apart from the transferred loss); and
• another company, being a member of the same wholly - owned group as the income company, transferred a tax loss of $15,000 to the income company; and
• the loss company incurred a tax loss of $50,000.
Of the $50,000 loss, the loss company can transfer no more than $30,000 ($60,000+$10,000 - $25,000 - $15,000) to the income company.
(3) Subsection (2) does not apply if the * tax loss is a * film loss. In that case, the amount transferred also cannot exceed the amount worked out as follows:
Method statement
Step 1. Add together the * income company's * net assessable film income and * net exempt film income (if any) for the * deduction year.
Step 2. Subtract the * income company's deductions for the * deduction year for amounts of * film losses transferred to the income company (by the * loss company or any other company) by agreements made before the agreement by which the first amount is transferred.
(4) Subsections (2) and (3) do not apply if the transfer occurs because either or both of the conditions in subsections 170 - 42(2) and (4) are met. In that case, the amount transferred also cannot exceed the amount worked out as follows:
Method statement
Step 1. Identify each * bundle of losses that, on the assumption in subsection 170 - 42(2) or (4) (as appropriate), would have included the * tax loss or * film loss (as appropriate).
Note 1: There will be 2 or more bundles of losses identified if both of the conditions in subsections 170 - 42(2) and (4) are met.
Note 2: There will be more than 1 bundle of losses identified on the basis of the assumption in paragraph 170 - 42(4) if the conditions in subsections 170 - 30(1) and (2) are met in relation to the loss company and the income company because of multiple applications of section 170 - 33 each involving a different first link company.
Step 2. For each * bundle identified, work out how much of the * tax loss or * film loss (as appropriate) the * income company would have been able to deduct in the * deduction year assuming that:
(a) the loss could have been deducted in that year only after the deduction in that year of any other losses of that * sort that would have been included in the bundle, other than losses (the transferable losses ) that could be transferred from the * loss company to the income company for that year; and
(b) if the bundle would have included 2 or more transferable losses of that sort--those losses could have been deducted only in the order in which the loss company incurred them.
Note 1: If the assumption in subsection 170 - 42(2) is relevant to the bundle, it would have included losses incurred by the income company and transferred (or taken to be transferred) to the company (from itself) under Subdivision 707 - A.
Note 2: If the assumption in paragraph 170 - 42(4) is relevant to the bundle, it would have included losses actually incurred by the first link company and transferred (by one or more transfers under Subdivision 707 - A) to the income company.
Step 3. Total every result of step 2 for the * tax loss or * film loss (as appropriate).