Commonwealth Numbered Acts

INCOME TAX ASSESSMENT ACT 1997 No. 38 of 1997 - SECT 170.45

Loss company can only transfer what it cannot use itself

(1) The amount transferred cannot exceed the amount of the *loss company's
*tax loss that, apart from the transfer, the loss company would carry forward
to the next income year after the *deduction year. Note: If the loss year and
the deduction year are the same, the loss company would carry forward the
whole of the tax loss, because Division 36 does not allow a tax loss to be
deducted in the income year in which it was incurred. Example: In the
deduction year the loss company has:
. a tax loss from an earlier income year of $25,000; and
. other deductions totalling $10,000; and
. assessable income of $20,000; and
. net exempt income of $3,000. Of the $25,000 loss, the loss company can
transfer no more than $12,000 ($25,000 - (($20,000 + $3,000) - $10,000) to the
income company.

Transferred loss must not exceed what the income company can use

(2) The amount transferred also cannot exceed the amount worked out as
follows: Method statement Step 1. Add together the *income company's
assessable income and *net exempt income (if any) for the *deduction year.
Step 2. Subtract the *income company's deductions for the *deduction year,
except deductions for amounts of *tax losses transferred to the income company
(by the *loss company or any other company). Step 3. Subtract the *income
company's deductions for the *deduction year for amounts of *tax losses
transferred to the income company (by the *loss company or any other company)
by agreements made before the agreement by which the first amount is
transferred. Example: In the deduction year:
. the income company has assessable income of $60,000, net exempt income of
$10,000 and deductions of $25,000 (apart from the transferred loss); and
. another company, being a member of the same wholly-owned group as the income
company, transferred a tax loss of $15,000 to the income company; and
. the loss company incurred a tax loss of $50,000. Of the $50,000 loss, the
loss company can transfer no more than $30,000
($60,000+$10,000-$25,000-$15,000) to the income company.

(3) Subsection (2) does not apply if the *tax loss is a *film loss. In that
case, the amount transferred also cannot exceed the amount worked out as
follows: Method statement Step 1. Add together the *income company's *net
assessable film income and *net exempt film income (if any) for the *deduction
year. Step 2. Subtract the *income company's deductions for the *deduction
year for amounts of *film losses transferred to the income company (by the
*loss company or any other company) by agreements made before the agreement by
which the first amount is transferred.