Private ruling: company losses
Published: November 2012
Ruling period: Year ended 30 June 2009 | Year ended 30 June 2010 | Year ended 30 June 2011 | Year ended 30 June 2012
Date scheme commenced: 1 July 2008

Ruling: Q1: Can the company transfer its losses to a sole individual director and shareholder to offset against future personal capital gains? | A1: No.


Relevant legislative provisions: Income Tax Assessment Act 1997 Division 36

Reasons for decision: Summary: A company is a separate legal entity to its director/shareholders and the tax losses attach to the company not to the individual director/shareholder. There are no income tax provisions which allow for the transfer of tax losses from a company to an individual. Unless the losses can be transferred to a related company, once the company is wound-up, or deregistered, the losses will cease to exist. While we appreciate your situation, there is no provision available that would allow the company to transfer its loss to an individual director/shareholder to offset against their own personal income or capital gains.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: The company was set up to purchase and operate a business franchise. | An initial investment was made to purchase and set up the business and was funded through business loans and monies invested by the sole director/shareholder of the company. | The business operated for approximately three years at a loss and was sold in the 2011-12 financial year, making a capital loss. | The company has ceased all business activities.