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INCOME TAX ASSESSMENT ACT 1997 - SECT 175.25 Deduction injected into company because of available income or capital gain

INCOME TAX ASSESSMENT ACT 1997 - SECT 175.25

Deduction injected into company because of available income or capital gain

  (1)   The Commissioner may disallow a deduction of a company for an income year to the extent that the company would not have incurred the loss, outgoing or expenditure that the deduction is for if it had not * derived some or all of the assessable income it derived in that income year, or had not made some or all of a * capital gain it made in that income year.

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

  (2)   The Commissioner cannot disallow any of the deduction if:

  (a)   the * continuing shareholders will benefit from any profit or advantage that has arisen or might arise directly or indirectly from the loss, outgoing or expenditure being incurred; and

  (b)   the Commissioner thinks that the extent to which they will benefit is fair and reasonable having regard to their respective * shareholding interests in the company.

Note:   Section   175 - 100 allows the Commissioner to disallow a deduction of an insolvent company.

  (3)   The continuing shareholders are the individuals who had * shareholding interests in the company both immediately before the loss, outgoing or expenditure was incurred, and immediately afterwards.

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