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INCOME TAX ASSESSMENT ACT 1997 - SECT 719.260

Special test for utilising a loss because a company maintains the same owners

Meeting the conditions in section   165 - 12

  (1)   The focal company is taken to meet the conditions in section   165 - 12 for the claim year and the loss if and only if the company (the test company ) identified in relation to the focal company in accordance with section   719 - 265 would have met those conditions for that year on the relevant assumptions in:

  (a)   section   719 - 270 (which is about assuming the test company made the loss for a particular income year); and

  (b)   section   719 - 275 (which is about assuming that nothing happened in relation to certain things that would affect whether the test company would meet those conditions); and

  (c)   section   719 - 280 (which is about assuming that the test company would have failed to meet those conditions in certain circumstances).

Focal company's failure to meet conditions in section   165 - 12

  (2)   The focal company is taken to fail to meet a condition in section   165 - 12 only at:

  (a)   the first time the test company would have failed to meet the condition on the relevant assumptions mentioned in subsection   (1); or

  (b)   the * test time described in subsection   166 - 5(6) for the test company, if:

  (i)   Division   166 is relevant to working out whether the test company could have * utilised the loss for the claim year on the relevant assumptions mentioned in paragraphs   (1)(a) and (b); and

  (ii)   the test company is not assumed under section   719 - 280 to fail to meet the condition before the test time.

Note:   If the focal company is taken to fail to meet a condition in section   165 - 12, the focal company will not be able to utilise the loss for the claim year unless the focal company meets the condition in section   165 - 13 by satisfying the business continuity test. That test applies to the focal company (and not the test company).

Business continuity test for focal company under Division   166

  (3)   If subsection   166 - 5(5) affects whether the focal company can * utilise the loss for the claim year because the focal company is a * widely held company or an * eligible Division   166 company, or both, during the year, subsection   166 - 5(6) operates as if it required the * business continuity test to be applied to the * business the focal company carried on just before the time described in subsection   (2) of this section.

Business continuity test for focal company to transfer loss

  (4)   If subsection   707 - 125(4) is relevant to working out whether the focal company can transfer the loss to a company under Subdivision   707 - A, that subsection:

  (a)   has effect as if subsection   707 - 125(5) described the focal company's income year containing the time at which the focal company is taken under subsection   (2) of this section to fail to meet a condition in section   165 - 12; and

  (b)   has effect despite subsection   (3) of this section.

Note:   For working out whether certain losses can be transferred under Subdivision   707 - A, subsection   707 - 125(4) modifies the operation of subsection   166 - 5(6) by extending the business continuity test period to include the income year described in subsection   707 - 125(5).


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