TAX AND SUPERANNUATION LAWS AMENDMENT (2013 MEASURES NO. 1) ACT 2013

A corporate tax entity can choose to "carry back" a tax loss it has for the current year, or for the preceding income year, against the income tax liability it had for either of the 2 income years preceding the current year.

The entity gets a refundable tax offset for the current year that is a proxy for the tax the entity would save if it deducted the loss in the income year to which the loss is "carried back".

The refundable tax offset is capped at the lesser of $1,000,000 multiplied by the corporate tax rate, and the entity's franking account balance.

Subdivision 160 - A -- Object of this Division

Table of sections

160 - 5 Object of this Division

The object of this Division is to reduce the tax disincentive for corporate tax entities to take sensible investment risks. The Division does this by allowing such entities to offset their tax losses against their income tax liabilities for the 2 previous income years through a refundable tax offset.

Subdivision 160 - B -- Entitlement to and amount of loss carry back tax offset

Table of sections

160 - 10 Entitlement to loss carry back tax offset

160 - 15 Amount of loss carry back tax offset

160 - 10 Entitlement to loss carry back tax offset

An entity is entitled to a * tax offset (the loss carry back tax offset ) for the * current year if the following conditions are satisfied:

(a) the entity is a * corporate tax entity throughout the current year;

Note: See also section 160 - 25.

(b) either or both of the following income years were * loss years:

(i) the current year;

(ii) the income year just before the current year (the middle year );

(i) the middle year;

(ii) the income year just before the middle year (the earliest year );

(d) any of the following requirements are satisfied for the current year and each of the 5 income years before the current year:

(i) the entity has lodged its * income tax return for the year;

(ii) the entity was not required to lodge an income tax return for the year;

(iii) the Commissioner has made an assessment of the entity's income tax for the year;

(e) the entity makes a * loss carry back choice for the current year in accordance with Subdivision 160 - C.

Note 1: The entity is entitled to only one loss carry back tax offset for the current year. However, that offset has 2 components, one relating to the earliest year and one relating to the middle year: see section 160 - 15.

Note 2: The loss carry back tax offset is a refundable tax offset: see section 67 - 23.

160 - 15 Amount of loss carry back tax offset

(1) The amount of the entity's * loss carry back tax offset for the * current year is the least of the following amounts:

(a) the sum of the * loss carry back tax offset components for the earliest year and the middle year;

(b) the entity's * franking account balance at the end of the current year;

(2) For the purposes of working out the amount of the entity's * loss carry back tax offset for the * current year, the entity's loss carry back tax offset component for an income year is worked out as follows:

Method statement

Step 1. Start with the amount of the * tax loss the entity * carries back to the income year (or the sum of the amounts of the tax losses the entity carries back to the income year).

Note: If no amount is carried back to the income year, the step 1 amount, and the loss carry back tax offset component for the income year, are nil.

Step 2. Reduce the step 1 amount by the entity's * net exempt income for the income year.

Note: Do not reduce the step 1 amount by the entity's net exempt income to the extent the net exempt income has already been utilised: see section 960 - 20.

Step 3. Multiply the step 2 amount by the * corporate tax rate for the * current year.

Step 4. The entity's loss carry back tax offset component for the income year is so much of the entity's * income tax liability for the income year as does not exceed the step 3 amount.

Example: Redom Pty Ltd has at the end of the 2013 - 14 income year:

(a) a tax loss of $900,000 for that year and a franking account balance of $280,000; and

(b) for the 2011 - 12 income year--an income tax liability of $120,000 and net exempt income of $5,000; and

Redom chooses to carry back $405,000 of its tax loss for the 2013 - 14 year to the 2011 - 12 year and $495,000 of that loss to the 2012 - 13 year.

Redom's loss carry back tax offset for the 2013 - 14 year is $268,500, worked out as follows:

(a) an offset component for the 2011 - 12 income year of $120,000, calculated by starting with the $405,000 carried back, reducing that at step 2 by $5,000, and multiplying the result by 30%.

(b) an offset component for the 2012 - 13 income year of $148,500, calculated by starting with the $495,000 carried back and multiplying the result by 30%.

The sum of the 2 components is $268,500 (which is less than Redom's $280,000 franking account balance at the end of the 2013 - 14 year). If that sum had exceeded that balance, the amount of the offset would have been limited under paragraph ( 1)(b) to that balance.

Income tax liability for earliest year already utilised

(3) For the purposes of applying step 4 of the method statement in subsection ( 2) to work out the entity's * loss carry back tax offset component for the earliest year, disregard so much of the entity's * income tax liability for the earliest year as has previously been included (for the purpose of working out the entity's entitlement to a * loss carry back tax offset for the middle year) in a loss carry back tax offset component.

Foreign residents

(4) Paragraph ( 1)(b) does not apply if the entity was a foreign resident (other than an * NZ franking company) for:

(a) if the entity * carries back an amount to the earliest year--more than half of the earliest year; and

(b) if the entity carries back an amount to the middle year--more than half of the middle year.

Subdivision 160 - C -- Loss carry back choice

Table of sections

160 - 20 Loss carry back choice

160 - 25 Entity must have been a corporate tax entity during relevant years

160 - 30 Transferred tax losses etc. not included

160 - 35 Integrity rule--no loss carry back tax offset if scheme entered into

160 - 20 Loss carry back choice

(1) The entity may make a loss carry back choice for the * current year that specifies:

(a) how much of the entity's * tax loss for the current year (if any) is to be carried back to the earliest year; and

(b) how much of the entity's tax loss for the middle year (if any) is to be carried back to the earliest year; and

(2) The choice must be made in the * approved form by:

(a) the day the entity lodges its * income tax return for the * current year; or

(b) such later day as the Commissioner allows.

160 - 25 Entity must have been a corporate tax entity during relevant years

(1) The entity cannot * carry back an amount of a * tax loss to the earliest year unless the entity was a * corporate tax entity throughout the earliest year (disregarding any period when the entity was not in existence) and the middle year.

(2) The entity cannot * carry back an amount of a * tax loss to the middle year unless the entity was a * corporate tax entity throughout the middle year (disregarding any period when the entity was not in existence) .

Note: The entity must be a corporate tax entity throughout the current year: see paragraph 160 - 10(a).

160 - 30 Transferred tax losses etc. not included

The entity cannot * carry back an amount of a * tax loss for an income year, to the extent that the loss:

(a) was transferred to or from the entity under Division 170 or Subdivision 707 - A (about certain company groups); or

(b) exceeds the amount that would be the entity's tax loss for the year if section 36 - 55 (about excess franking offsets) were disregarded.

160 - 35 Integrity rule--no loss carry back tax offset if scheme entered into

No loss carry back tax offset if scheme entered into

(1) The * corporate tax entity cannot * carry back an amount of a * tax loss to an income year (the gain year ) if:

(a) there is a * scheme for a disposition of * membership interests, or an * interest in membership interests, in:

(i) the corporate tax entity; or

(ii) an entity that has a direct or indirect interest in the corporate tax entity; and

(b) the scheme is entered into or carried out during the period:

(i) starting at the start of the gain year; and

(ii) ending at the end of the * current year; and

(c) the disposition results in a change in who controls, or is able to control, (whether directly, or indirectly through one or more interposed entities) the voting power in the corporate tax entity; and

(d) another entity receives, in connection with the scheme, a * financial benefit calculated by reference to one or more * loss carry back tax offsets to which it was reasonable, at the time the scheme was entered into or carried out, to expect the corporate tax entity would be entitled; and

(e) having regard to the relevant circumstances of the scheme, it would be concluded that a person, or one of the persons, who entered into or carried out the scheme or any part of the scheme did so for a purpose (whether or not the dominant purpose but not including an incidental purpose) of enabling the corporate tax entity to get a loss carry back tax offset.

Relevant circumstances

(2) For the purposes of paragraph ( 1)(e), the relevant circumstances of the * scheme for a disposition include the following:

(a) the extent to which the * corporate tax entity continued to conduct the same activities after the scheme as it did before the scheme;

(b) if the corporate tax entity continued to use the same assets after the scheme as it did before the scheme--the extent to which those assets were assets for which equivalents were not readily available at the time of the scheme;

(c) the matters referred to in subparagraphs 177D(b)(i) to (viii) of the Income Tax Assessment Act 1936 (applying subparagraph 177D(b)(iv) as if the reference to Part IVA of that Act were instead a reference to this section).

Application of this section to non - share equity interests

(3) This section:

(a) applies to a * non - share equity interest in the same way as it applies to a * membership interest; and

(b) applies to an * equity holder in the same way as it applies to a * member.

3 Subsection 995 - 1(1)

Insert:

"income tax liability" , of an entity for an income year, is the amount assessed as being the amount of income tax that the entity owes (as mentioned in step 4 of the method statement in subsection 4 - 10(3)) for the financial year applicable to the entity under subsection 4 - 10(2).

4 Subsection 995 - 1(1)

Insert:

"interest in membership interests" has the same meaning as in section 177EA of the Income Tax Assessment Act 1936.

5 Subsection 995 - 1(1)

Insert:

"scheme for a disposition" , in relation to * membership interests or an * interest in membership interests, has the same meaning as in section 177EA of the Income Tax Assessment Act 1936.

Income Tax (Transitional Provisions) Act 1997

6 Before Division 165

Insert:

Division 160 -- Loss carry back tax offset

Table of Subdivisions

160 - A Application of Division 160 of the Income Tax Assessment Act 1997

Subdivision 160 - A -- Application of Division 160 of the Income Tax Assessment Act 1997

Table of sections

160 - 1 Application of Division 160 of the Income Tax Assessment Act 1997

160 - 5 Modification for 2012 - 13 income year--no carry back to 2010 - 11 income year

160 - 1 Application of Division 160 of the Income Tax Assessment Act 1997

Division 160 of the Income Tax Assessment Act 1997 applies to assessments for the 2012 - 13 income year and later income years.

160 - 5 Modification for 2012 - 13 income year--no carry back to 2010 - 11 income year

(1) This section applies to assessments for the 2012 - 13 income year.

(2) Despite subsection 160 - 15(2) of the Income Tax Assessment Act 1997 , an entity's loss carry back tax offset component for the 2010 - 11 income year is treated as being nil.

Part 2 -- Ascertainment of totals of tax offset refunds

Division 1--Amendments relating to the 2012 - 13 income year

Income Tax Assessment Act 1997

7 Section 355 - 700

Repeal the section.

8 Application of amendment

The amendment made by item 7 does not apply in relation to an objection made before the commencement of this item.

9 Subsection 995 - 1(1)

Insert:

"tax offset refund" , of yours for an income year, means a refund you can get as mentioned in item 40 of the table in subsection 63 - 10(1) (refundable tax offsets) for the income year.

Income Tax (Transitional Provisions) Act 1997

10 At the end of Part 2 - 20

Add:

Division 67 -- Refundable tax offset rules

Table of Subdivisions

67 - L Notices of totals of tax offset refunds for 2012 - 13 income year

Subdivision 67 - L -- Notices of totals of tax offset refunds for 2012 - 13 income year

Table of sections

Giving notices

67 - 100 Notices of total of tax offset refunds

67 - 105 Deemed notices

67 - 110 Requests for notices

67 - 115 Effect of notices

Amending notices

67 - 120 Amendment of notices

Validity of notices, evidence and review

67 - 125 Validity of notices

67 - 130 Evidence

67 - 135 Review of notices

Giving notic e s

67 - 100 Notices of total of tax offset refunds

(1) The Commissioner may at any time give you a notice specifying:

(a) the amount the Commissioner has ascertained as being the total of your tax offset refunds for the 2012 - 13 income year; or

(b) that the Commissioner has ascertained that you can get no such refunds for the 2012 - 13 income year.

(2) The notice may be included in any notice the Commissioner gives to you, including a notice of assessment.

(3) The Commissioner may give you the notice electronically if you are required to lodge, or have lodged, your income tax return for the income year electronically.

67 - 105 Deemed notices

(1) This section applies if:

(a) an entity is a self - assessment entity for the 2012 - 13 income year; and

(b) the entity lodges its income tax return for the 2012 - 13 income year at a particular time; and

(2) The Commissioner is taken:

(a) to have ascertained, in accordance with what the entity specified in the return:

(i) an amount as being the total of the entity's tax offset refunds for the income year; or

(ii) that the entity can get no such refunds for the income year; and

(b) to have given the entity a notice to that effect under section 67 - 100 on the day on which the entity lodges the return.

67 - 110 Requests for notices

(1) You may request the Commissioner in the approved form to give you a notice under this Subdivision.

(2) The Commissioner must comply with the request if:

(a) the Commissioner has not already given you a notice under this Subdivision; and

(b) you make the request on or after:

(i) the day you lodge your income tax return for the income year; or

(ii) if you were not required to lodge an income tax return for the income year--the day after the end of the income year; and

(i) if the Commissioner has given or gives you a notice of assessment for the income year--the period within which you may object against the assessment under paragraph 14ZW(1)(aa) of the Taxation Administration Act 1953 ; or

(ii) otherwise--2 years after the end of the income year; or

(iii) in any case--such further period as the Commissioner allows.

(3) The Commissioner is treated, for the purposes of section 67 - 135, as having given you, on the 60th day after you make the request, a notice specifying that the Commissioner has ascertained that you can get no tax offset refunds for the income year, if the Commissioner has not complied with the request by that 60th day.

67 - 115 Effect of notices

(1) Your entitlement to a tax offset refund, and the time by which the refund must be applied in accordance with Divisions 3 and 3A of Part IIB of the Taxation Administration Act 1953 , do not depend on, and are not in any way affected by, the giving of a notice under this Subdivision.

(2) An ascertainment mentioned in subsection 67 - 100(1) is not an assessment for the purposes of the income tax law.

Amending notic e s

67 - 120 Amendment of notices

The Commissioner may amend a notice at any time. An amended notice is a notice for all purposes of this Subdivision.

Validity of notices, evidence and revi e w

67 - 125 Validity of notices

The validity of a notice is not affected by non - compliance with the provisions of this Act or of any other taxation law.

67 - 130 Evidence

(1) The production of:

(a) a notice given under this Subdivision; or

(b) a document under the hand of the Commissioner, a Second Commissioner, or a Deputy Commissioner, purporting to be a copy of a notice given under this Subdivision;

is, except in proceedings under Part IVC of the Taxation Administration Act 1953 on a review or appeal relating to the notice, conclusive evidence that the notice was given and of the particulars in it.

(2) The production of a document under the hand of the Commissioner, a Second Commissioner, or a Deputy Commissioner, purporting to be a copy of or extract from a notice given under this Subdivision is evidence of the matters set out in the document to the same extent as the original would have been evidence of those matters.

67 - 135 Review of notices

(1) You may object, in the manner set out in Part IVC of the Taxation Administration Act 1953 , against a notice given to you under this Subdivision if you are dissatisfied with the notice.

(2) Section 14ZV of the Taxation Administration Act 1953 applies to an amended notice in the same way as it applies to an amended determination.

(3) Despite subsection 14ZW(1) of that Act (and without limiting subsections 14ZW(2) and (3)), you must lodge the objection with the Commissioner before the end of:

(a) if the Commissioner gives you a notice of assessment for the income year--the period within which you may object against the assessment; or

(b) if the Commissioner does not give you a notice of assessment--the period within which you may have objected against an assessment under subsection 14ZW(1) if the Commissioner had given you notice of the assessment on the day the Commissioner gave you the notice under this Subdivision.

Division 2--Amendments applying from the 2013 - 14 year of income

Income Tax Assessment Act 1936

11 Subsection 6(1) ( paragraphs ( a) to (d) of the definition of assessment )

Repeal the paragraphs, substitute:

(a) the ascertainment:

(i) of the amount of taxable income (or that there is no taxable income); and

(ii) of the tax payable on that taxable income (or that no tax is payable); and

(iii) of the total of a taxpayer's tax offset refunds for a year of income (or that the taxpayer can get no such refunds for the year of income); or

Note 1: A taxpayer does not have a taxable income if the taxpayer's deductions equal or exceed the taxpayer's assessable income: see subsection 4 - 15(1) of the Income Tax Assessment Act 1997 .

Note 2: A taxpayer may have no tax payable on an amount of taxable income if that income is below the tax - free threshold or if the taxpayer's tax offsets reduce the taxpayer's basic income tax liability to nil.

(b) for a taxpayer that is the trustee of a unit trust that is a corporate unit trust (within the meaning of section 102J)--the ascertainment:

(i) of the net income of the trust (within the meaning of section 102D) (or that there is no net income); and

(ii) of the tax payable on that net income (or that no tax is payable); and

(iii) of the total of the taxpayer's tax offset refunds for a year of income (or that the taxpayer can get no such refunds for the year of income); or

(c) for a taxpayer that is the trustee of a unit trust that is a public trading trust (within the meaning of section 102R)--the ascertainment:

(i) of the net income of the trust (within the meaning of section 102M) (or that there is no net income); and

(ii) of the tax payable on that net income (or that no tax is payable); and

(iii) of the total of a taxpayer's tax offset refunds for a year of income (or that the taxpayer can get no such refunds for the year of income); or

(d) for a taxpayer that is the trustee of a trust estate (other than a trustee to which paragraph ( b) or (c) applies or the trustee of a complying superannuation fund, a non - complying superannuation fund, a complying approved deposit fund, a non - complying approved deposit fund or a pooled superannuation trust)--the ascertainment:

(i) of so much of the net income of the trust estate as is net income in respect of which the trustee is liable to pay tax (or that there is no net income in respect of which the trustee is so liable); and

(ii) of the tax payable on that net income (or that no tax is payable); and

(iii) of the total of a taxpayer's tax offset refunds for a year of income (or that the taxpayer can get no such refunds for the year of income); or

12 Subsection 6(1)

Insert:

"tax offset refund" has the meaning given by the Income Tax Assessment Act 1997 .

13 After paragraph 161AA(b)

Insert:

(ba) the total of its tax offset refunds for that year of income (or that it can get no such refund for that year of income); or

14 Section 166

Repeal the section, substitute:

166 Assessment

From the returns, and from any other information in the Commissioner's possession, or from any one or more of these sources, the Commissioner must make an assessment of:

(a) the amount of the taxable income (or that there is no taxable income) of any taxpayer; and

(b) the amount of the tax payable thereon (or that no tax is payable); and

15 Paragraph 166A(3)(c)

Repeal the paragraph, substitute:

(i) the taxable income or net income (or an assessment that there is no taxable income or net income); and

(ii) the tax payable on that income (or that no tax is payable); and

(iii) the total of the taxpayer's tax offset refunds for the year of income (or that the taxpayer can get no such refunds);

in accordance with what the taxpayer specified in the return;

16 Subsection 168(1)

Repeal the subsection, substitute:

(1) The Commissioner may at any time during any year, or after its expiration, make an assessment of:

(a) the taxable income derived (or that there is no taxable income) in that year or any part of it by any taxpayer; and

(b) the tax payable thereon (or that no tax is payable); and

(c) the total of the taxpayer's tax offset refunds for that year or that part of it (or that the taxpayer can get no such refunds).

17 After section 172

Insert:

172A Consequences of amendment of assessments of tax offset refunds

Amendment increases total of tax offset refunds

(1) If, by reason of an amendment of an assessment, the total of a person's tax offset refunds is increased, the Commissioner must apply the amount of the increase in accordance with Divisions 3 and 3A of Part IIB of the Taxation Administration Act 1953 .

Note: Interest on the amount of the increase may be payable under the Taxation (Interest on Overpayments and Early Payments) Act 1983 .

Amendment reduces total of tax offset refunds

(2) If:

(a) by reason of an amendment of an assessment, the total of a person's tax offset refunds is reduced; and

(b) as a result, an amount applied in accordance with Divisions 3 and 3A of Part IIB of the Taxation Administration Act 1953 before the amendment was excessive;

the person is liable to pay to the Commonwealth the amount of the excess. The amount is due 21 days after the Commissioner gives the person notice of the amended assessment.

Note: For provisions about collection and recovery of the amount, see Part 4 - 15 in Schedule 1 to the Taxation Administration Act 1953 .

(3) If any of the amount (the overpayment ) the person is liable to pay under subsection ( 2) remains unpaid after the time by which it is due to be paid, the person is liable to pay the general interest charge on the unpaid amount for each day in the period that:

(a) starts at the beginning of the day on which the overpayment was due to be paid; and

(b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid:

(i) the overpayment;

(ii) general interest charge on any of the overpayment.

Note: The general interest charge is worked out under Part IIA of the Taxation Administration Act 1953 .

18 Paragraph 175A(2)(b)

Omit "payable;", substitute "payable.".

19 Subsection 175A(2)

Omit "unless the taxpayer is seeking an increase in the taxpayer's liability".

20 At the end of section 175A

Add:

(3) Subsection ( 2) does not prevent the taxpayer from objecting against an assessment if the taxpayer is seeking an increase in:

(a) the taxpayer's liability; or

(b) the total of the taxpayer's tax offset refunds.

Income Tax (Transitional Provisions) Act 1997

21 At the end of subsection 67 - 100(1)

Add:

Note: The total of your tax offset refunds for later income years is included in your assessment for those years: see Part IV of the Income Tax Assessment Act 1936 .

Taxation Administration Act 1953

22 Subsection 8AAB(4) (after table item 10)

Insert:

10A

172A

Income Tax Assessment Act 1936

repayments of excessive tax offset refunds

23 Subsection 250 - 10(1) in Schedule 1 (after table item 50)

Insert:

excessive tax offset refunds

172A(2)

24 Application of amendments

The amendments made by this Division apply to assessments made on or after 1 July 2013 for the 2013 - 14 income year or later income years.

Division 3--Taxation Administration Act 1953

25 Paragraph 14ZZK(b)

Repeal the paragraph, substitute:

(b) the applicant has the burden of proving:

(i) if the taxation decision concerned is an assessment--that the assessment is excessive or otherwise incorrect and what the assessment should have been; or

(ii) in any other case--that the taxation decision concerned should not have been made or should have been made differently.

26 Paragraph 14ZZO(b)

Repeal the paragraph, substitute:

(b) the appellant has the burden of proving:

(i) if the taxation decision concerned is an assessment--that the assessment is excessive or otherwise incorrect and what the assessment should have been; or

(ii) in any other case--that the taxation decision should not have been made or should have been made differently.

27 Application of amendments

The amendments made by this Division apply to an assessment if:

(a) the assessment is made on or after 1 July 2013; and

(b) in the case of an assessment that relates to an income year or other accounting period:

(i) the income year is the 2013 - 14 income year or a later income year; or

(ii) the other accounting period commences on or after 1 July 2013.

Part 3 -- Anti - avoidance

Income Tax Assessment Act 1936

28 Subsection 6(1)

Insert:

"loss carry back tax offset" has the same meaning as in the Income Tax Assessment Act 1997 .

29 After paragraph 177C(1)(b a )

Insert:

(b aa ) a loss carry back tax offset being allowable to the taxpayer where the whole or a part of that loss carry back tax offset would not have been allowable, or might reasonably be expected not to have been allowable, to the taxpayer if the scheme had not been entered into or carried out; or

30 A fter paragraph 177C(1) ( e )

Insert :

( e a ) in a case where paragraph ( b aa ) applies--the amount of the whole of the loss carry back tax offset or of the part of the loss carry back tax offset, as the case may be , referred to in that paragraph; and

3 1 After paragraph 177C(2) (c )

Insert:

( c a ) a loss carry back tax offset being allowable to the taxpayer the whole or a part of which would not have been, or might reasonably be expected not to have been, allowable to the taxpayer if the scheme had not been entered into or carried out, where:

(i) the allowance of the loss carry back tax offset to the taxpayer is attributable to the making of a declaration, agreement, election, selection or choice, the giving of a notice or the exercise of an option by any person, being a declaration, agreement, election, selection, choice, notice or option expressly provided for by this Act; and

(ii) the scheme was not entered into or carried out by any person for the purpose of creating any circumstance or state of affairs the existence of which is necessary to enable the declaration, agreement, election, selection, choice, notice or option to be made, given o r exercised, as the case may be; or

32 Subsection 177C(3)

After " (c )(i)", insert " , ( c a)(i)".

33 After paragraph 177C(3)( c )

Insert:

( caa ) the allowance of a loss carry back tax offset to a taxpayer; or

34 After paragraph 177C(3)( f )

Insert:

( fa ) the loss carry back tax offset would not have b een allowable; or

35 After paragraph 177CB(1)(c)

Insert:

(ca) the whole or a part of a loss carry back tax offset not being allowable to the taxpayer;

3 6 At the end of paragraph 177F(1)(c)

Add "or".

3 7 After paragraph 177F(1)( c )

Insert:

( c a ) in the case of a tax benefit that is referable to a loss carry back tax offset, or a part of a loss carry back tax offset, being allowable to the taxpayer--determine that the whole or a part of the loss carry back tax offset, or the part of the loss carry back tax offset, as the case may be, is not to be allowable to the taxpayer; or

3 8 After paragraph 177F(3)( c )

Insert:

( c a ) if, in the opinion of the Commissioner:

(i) an amount would have been allowed, or would be allowable, to the relevant taxpayer as a loss carry back tax offset if the scheme had not been entered into or carried out, being an amount that was not allowed or would not, apart from this subsection, be allowable, as the case may be, as a loss carry back tax offset to the relevant taxpayer; and

(ii) it is fair and reasonable that the amount, or a part of the amount, should be allowable as a loss carry back tax offset to the relevant taxpayer;

determine that that amount or that part, as the case may be, should have been allowed or is allowable, as the case may be, as a loss carry back tax offset to the relevant taxpayer; or

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