Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 165.115A

Application

             (1)  This Subdivision applies to a company if:

                     (a)  a changeover time has occurred or occurs in relation to the company after the commencement time; and

                     (b)  at the changeover time the company had an unrealised net loss (see section 165‑115E); and

                     (c)  either of the following applies:

                              (i)  the company makes a ^* capital loss, or apart from this Subdivision would be entitled to a deduction, in respect of a ^* CGT event that happens to a ^* CGT asset referred to in subsection (1A);

                             (ii)  the company makes a ^* trading stock loss in respect of a CGT asset referred to in subsection (1A) that is an item of ^* trading stock; and

                     (d)  the company would not, at the changeover time, satisfy the maximum net asset value test under section 152‑15.

CGT assets in respect of which Subdivision applies

          (1A)  The ^* CGT assets for the purposes of paragraph 165‑115A(1)(c) are:

                     (a)  any CGT asset that the company owned at the changeover time; and

                     (b)  any CGT asset that the company did not own at the changeover time but had owned at a previous time, where:

                              (i)  a deferral event referred to in subsection 170‑255(1) happened before the changeover time; and

                             (ii)  the deferral event involved the company as the originating company referred to in that subsection; and

                            (iii)  the deferral event would have resulted in the company making a ^* capital loss, or becoming entitled to a deduction, in respect of the CGT asset except for section 170‑270; and

                            (iv)  the company is not taken to have made a capital loss at or before the changeover time, or to have become entitled to a deduction at that time, under section 170‑ 275 in respect of the asset.

Company may choose to disregard CGT assets acquired for less than $10,000

          (1B)  A company may choose, for the purposes of the application of this Subdivision to it in respect of a particular changeover time, that every ^* CGT asset that has been acquired by it for less than $10,000 is to be disregarded.

                   However, the choice does not affect the application of the ^* global method of working out whether the company has an unrealised net loss (see subsection 165‑115E(2)).

Time for making choice

          (1C)  A choice under subsection (1B) must be made on or before:

                     (a)  the day on which the company lodges its ^* income tax return for the income year in which the relevant changeover time occurred; or

                     (b)  such later day as the Commissioner allows.

Trading stock loss

          (1D)  A company is taken to have made a trading stock loss in respect of an asset that is an item of ^* trading stock if, and only if:

                     (a)  one of the following applies:

                              (i)  the company ^* disposes of the item;

                             (ii)  the item stops being trading stock (within the meaning of section 70‑80);

                            (iii)  the item is revalued under Division 70; and

                     (b)  if subparagraph (a)(i) or (ii) applies--the item's ^* market value at the time when it is disposed of or stops being trading stock is less than:

                              (i)  in respect of an item that has been valued under Division 70--its latest value under the Division; or

                             (ii)  otherwise--its cost at that time; and

                     (c)  if subparagraph (a)(iii) applies--the item's value under the revaluation is less than:

                              (i)  in respect of an item that has previously been valued under Division 70--its latest value under that Division before the revaluation; or

                             (ii)  otherwise--its cost at the time of the revaluation.

                   The difference worked out under paragraph (b) or (c), as the case may be, constitutes the amount of the ^* trading stock loss.

Commencement time

             (2)  For the purposes of this Subdivision, the commencement time of a company is:

                     (a)  if the company was in existence at 1 pm (by legal time in the Australian Capital Territory) on 11 November 1999--that time; or

                     (b)  if the company came into existence after that time--the time when it came into existence.

Reference time

          (2A)  For the purposes of the application of this Subdivision to a company in relation to a particular time (the test time ), the reference time is:

                     (a)  if no changeover time occurred in respect of the company before the test time--the commencement time; or

                     (b)  otherwise--the time immediately after the last changeover time that occurred in respect of the company before the test time.

Asset owned at more than one changeover time

             (3)  If:

                     (a)  2 or more changeover times have occurred or occur in relation to a company; and

                     (b)  the company owned a particular asset at more than one of those changeover times;

this Subdivision applies to the company in respect of that asset only in relation to the later or latest of those changeover times.

Note:          For changeover time see sections 165‑115C and 165‑115D.