Commonwealth Numbered Acts

INCOME TAX ASSESSMENT ACT 1997 No. 38 of 1997 - SECT 170.5

(1) A company can transfer a tax loss to another company so that the other
company can deduct it in the income year of the transfer.

(2) Both companies must be members of the same *wholly-owned group. There are
other eligibility requirements that they must also satisfy.

(3) The transferred loss must be "surplus" in the sense that the transferring
company cannot use it because there is not enough assessable income to offset
it. The other company must have enough assessable income to offset the
transferred tax loss.

(4) Neither company must be prevented from deducting the loss by Division 165
or 175. Note: Division 165 deals with the income tax consequences of changing
ownership or control of a company. Division 175 deals with using a company's
tax losses to avoid income tax.

(5) The tax loss is transferred by an agreement between the 2 companies.

(6) The tax loss can be transferred in the same year as it is incurred. In
that case different rules apply.