Transferring tax losses attributable to activities undertaken before the Timor Sea Maritime Boundaries Treaty entered into force
(1) If:
(a) you have a * tax loss for the income year in which the * Timor Sea Maritime Boundaries Treaty entered into force, or for an earlier income year; and
(b) some or all of the tax loss is attributable to you undertaking * transitioned petroleum activities before that treaty entered into force;
you may, for that income year or a later income year, choose to transfer all or any part of the amount of the tax loss that is so attributable to a * corporate tax entity (the transferee ) that is your * associate and either is an Australian resident or has a * permanent establishment in Australia.
Transferring or applying other tax losses
(2) If:
(a) you have a * tax loss for an income year (the loss year ); and
(b) some or all of the tax loss is attributable to you undertaking * transitioned petroleum activities; and
(c) paragraph (1)(b) does not apply to those activities;
you may, for that income year or a later income year:
(d) choose to transfer all or any part of the amount of the tax loss that is so attributable to a * corporate tax entity (the transferee ) that either is an Australian resident or has a * permanent establishment in Australia; or
(e) choose to apply all or any part of the amount of the tax loss that is so attributable as a deduction from your assessable income for any of the 4 income years preceding the income year for which you make the choice.
(3) However:
(a) the total amount chosen to be transferred or applied under subsection (2) for an income year must not exceed 10% of the total amount:
(i) on which your liability for * foreign income tax under the law of Timor - Leste is required to be worked out; and
(ii) that relates to undertaking those * transitioned petroleum activities during that year; and
(b) you cannot make a choice under paragraph (2)(e) for an income year if you do not have a * franking surplus at the end of that year; and
(c) the total amount chosen to be applied under paragraph (2)(e) for an income year must not exceed the sum of:
(i) the amount of your franking surplus at the end of that year; and
(ii) the product of the amount of that surplus and the * corporate tax gross - up rate.
(4) In working out for the purposes of paragraph (3)(a) the total amount chosen to be transferred or applied under subsection (2) for an income year, disregard:
(a) any part of the * tax loss attributable to deductions for assets allocated to a project pool under section 417 - 35; and
(b) any part of the * tax loss attributable to deductions for assets allocated to a project pool under Subdivision 40 - I, to the extent that the deductions relate to * project amounts to which subsection 417 - 45(1) or (2) applies.
(5) In working out for the purposes of paragraph (3)(a) the total amount on which your liability for * foreign income tax under the law of Timor - Leste is required to be worked out, disregard the amounts of any deductions for tax paid under the law of Timor - Leste.
(6) Paragraphs (3)(b) and (c) do not apply if you were a foreign resident (other than a * NZ franking company) for more than half of the income year for which the choice was made.