INCOME TAX ASSESSMENT ACT 1997 - SECT 175.20 Income or capital gain injected into company because of available deductions

INCOME TAX ASSESSMENT ACT 1997 - SECT 175.20

  (1)   The Commissioner may disallow deductions of a company (or parts of them) for an income year if:

  (a)   the company has * derived assessable income, or a * capital gain accrued to the company, some or all of which (the injected amount ) would not have been derived, or would not have accrued, if the company did not have those deductions; and

  (b)   the income was derived, or the capital gain accrued, in that income year.

The disallowed deductions and parts of deductions may exceed the * injected amount.

Note:   The disallowance may result in a tax loss for the income year. See section   175 - 35.

  (2)   The Commissioner cannot disallow the deductions or parts of the deductions if the * continuing shareholders will benefit from the derivation of the * injected amount to an extent that the Commissioner thinks fair and reasonable having regard to their respective * shareholding interests in the company.

Note:   Section   175 - 100 allows the Commissioner to disallow the whole or part of any deductions of an insolvent company.

  (3)   The continuing shareholders are the individuals who had * shareholding interests in the company both immediately before the * injected amount was * derived, and immediately afterwards.