Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) The Commissioner may disallow a deduction of a company for an income year to the extent that the company would not have incurred the loss, outgoing or expenditure that the deduction is for if it had not * derived some or all of the assessable income it derived in that income year, or had not made some or all of a * capital gain it made in that income year.
Note: The disallowance may result in a tax loss for the income year. See section 175 - 35.
(2) The Commissioner cannot disallow any of the deduction if:
(a) the * continuing shareholders will benefit from any profit or advantage that has arisen or might arise directly or indirectly from the loss, outgoing or expenditure being incurred; and
(b) the Commissioner thinks that the extent to which they will benefit is fair and reasonable having regard to their respective * shareholding interests in the company.
Note: Section 175 - 100 allows the Commissioner to disallow a deduction of an insolvent company.
(3) The continuing shareholders are the individuals who had * shareholding interests in the company both immediately before the loss, outgoing or expenditure was incurred, and immediately afterwards.