ATO ID 2003/23: Group company loss transfers: transfer of parts of a tax loss to multiple companies
Date of decision: 13 November 2002
Year of income: Year ended 30 June 2002
Business line: Public Groups and International

Issue
Can a loss company with a surplus tax loss, transfer parts of that loss to more than one income company within the same wholly-owned group under Subdivision 170-A of the Income Tax Assessment Act 1997 (ITAA 1997) where the conditions for transfer in the Subdivision are otherwise satisfied?

Decision
Yes. Subdivision 170-A of the ITAA 1997 allows a loss company to transfer parts of a tax loss to more than one income company within the same wholly-owned group to the extent of the total amount of loss available for transfer and where the conditions for transfer in the Subdivision are otherwise satisfied.

Facts
Company L (the 'loss company') has a surplus tax loss which was incurred in an income year commencing after 30 June 1998. Three related companies (the 'income companies') have derived assessable income in a later income year. All four companies are resident companies and have been members of the same wholly-owned group of companies since before 1 July 1998. None of the four companies are prescribed dual resident companies.

Reasons for decision
Summary: Subsection 170-10(1) of the ITAA 1997 operates to allow a loss company to transfer an amount of its tax loss to an income company within the same wholly-owned group where conditions for transfer in Subdivision 170-A are satisfied. Subsection 170-10(2) provides a level of flexibility such that the amount transferred can be the whole or part of the tax loss. The Commissioner affirms in Taxation Ruling TR 1998/12 that different parts of a loss may be transferred to a number of income companies within a group, to the extent of the total amount of loss available for transfer. Accordingly, if the conditions of Subdivision 170-A of the ITAA 1997 are met, the loss company can transfer parts of its tax loss to the three income companies in respect of the later income year to the extent of the total amount of loss available for transfer.

Legislative references: Income Tax Assessment Act 1997 Subdivision 170-A subsection 170-10(1) subsection 170-10(2)
Related public rulings and determinations: Taxation Ruling TR 98/12
Related ATO interpretative decisions: ATO ID 2003/18 | ATO ID 2003/19 | ATO ID 2003/21 | ATO ID 2003/22
Subject references: Group company loss transfers