Method statement

Step 1.    If the entity is a company and the relevant class of assessable foreign income is the "all other assessable income" class--reduce the unutilised overall foreign loss amount to the extent (if any) that the relevant overall foreign loss is attributable to losses or outgoings incurred in gaining or producing income of a kind that would be the company's non-assessable non-exempt income if it were gained or produced in the commencement year.

              Otherwise--do not reduce the unutilised overall foreign loss amount under this step.

Step 2.    For income years other than the most recent 7 income years ending before the commencement year--reduce the result of step 1 by half.

                   Note:             Step 2 is modified for losses transferred to a head company of a consolidated group: see subsection 770-80(3).