Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p26
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 26/29)
Character Range: 2907446–2910073

relation to a particular income year;
 (ii) the interest is an equity interest in the company at the end of that income year;
 (iii) subsection 974‑75(6) applies to the interest from the time (the change time) that is the start of the next income year;
there is, or is taken to have been, a debit to the *non‑share capital account at the change time equal to:
where:
credits in relation to the interest is the sum of all the credits that have been made to the *non‑share capital account in relation to the interest before the change time.
debits in relation to the interest is the sum of all the debits that have been made to the *non‑share capital account in relation to the interest before the change time.
 (4) To avoid doubt, if:
 (a) it appears that a debit to the company's *non‑share capital account has arisen because an interest in the company appears to be, or have become, a *debt interest at a time in a particular income year; and
 (b) because subsection 974‑75(6) or 974‑110(1A) is subsequently found not to apply in relation to the interest and that income year, the interest was not in fact, or did not in fact become, a debt interest at that time;
the debit referred to in paragraph (a) is taken never to have arisen.

Division 165—Income tax consequences of changing ownership or control of a company

Table of Subdivisions
 Guide to Division 165
165‑A Deducting tax losses of earlier income years
165‑B Working out the taxable income and tax loss for the income year of the change
165‑CA Applying net capital losses of earlier income years
165‑CB Working out the net capital gain and the net capital loss for the income year of the change
165‑CC Change of ownership or control of company that has an unrealised net loss
165‑CD Reductions after alterations in ownership or control of loss company
165‑C Deducting bad debts
165‑D Tests for finding out whether the company has maintained the same owners
165‑E Business continuity test
165‑F Special provisions relating to ownership by non‑fixed trusts

Guide to Division 165

165‑1  What this Division is about

      A change in the ownership or control of a company can affect:
          • whether it can deduct its tax losses of earlier income years; and
          • how it calculates its taxable income and tax loss for the income year of the change; and
          • whether it can deduct debts owed to it that are written off as bad.

Subdivision 165‑A—Deducting tax losses of earlier income years

Guide to Subdivision 165‑A

165‑5  What this Subdivision is about

      A company cannot deduct a tax loss unless:
             (a) it has the same owners