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INCOME TAX (TRANSITIONAL PROVISIONS) ACT 1997 - SECT 770.30

Deduction limit for foreign loss component

             (1)  The amount of the foreign loss component of one or more tax losses in a loss parcel that an entity can deduct in an income year cannot exceed the amount worked out for the year using the table.

 

Limit on deducting foreign loss component of a tax loss

Item

For this income year:

The amount of the component that you can deduct cannot exceed:

1

The commencement year

1 /5 of the starting total for the loss parcel

2

The first income year ending after the commencement year

The difference between:

(a) 2 / 5 of the starting total for the loss parcel; and

(b) the amount of the foreign loss component of one or more tax losses in the loss parcel deducted for the income year mentioned in item 1

3

The second income year ending after the commencement year

The difference between:

(a) 3 / 5 of the starting total for the loss parcel; and

(b) the amount of the foreign loss component of one or more tax losses in the loss parcel deducted for the income years mentioned in items 1 and 2

4

The third income year ending after the commencement year

The difference between:

(a) 4 / 5 of the starting total for the loss parcel; and

(b) the amount of the foreign loss component of one or more tax losses in the loss parcel deducted for the income years mentioned in items 1, 2 and 3

Note:          There may be a reduction of the limit for the head company of a consolidated group under section 770-100.

             (2)  This section does not limit the amount of the foreign loss component of a tax loss that an entity can deduct in a year later than the third income year ending after the commencement year.

Note:          For later years, any remaining undeducted tax loss may be deducted to the extent permitted by the general rules for tax losses.

             (3)  To avoid doubt, if, because of subsection (1) or section 770-100, an entity cannot deduct all or part of a tax loss in an income year, subsection 36-17(7) of the 1997 Act does not prevent the entity deducting other tax losses in the same year in accordance with that subsection.


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