Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p27
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 27/29)
Character Range: 2909817–2912522

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 and the same control throughout the period from the start of the loss year to the end of the income year; or
             (b) it satisfies the business continuity test by carrying on the same business (including entering into no new kinds of transactions and conducting no new kinds of business), or by carrying on a similar business (on or after 1 July 2015).
          Note: The exceptions mentioned in this section apply differently in relation to designated infrastructure project entities: see section 415‑35.

Table of sections

Operative provisions
165‑10 To deduct a tax loss
165‑12 Company must maintain the same owners
165‑13 Alternatively, the company must satisfy the business continuity test
165‑15 The same people must control the voting power, or the company must satisfy the business continuity test
165‑20 When company can deduct part of a tax loss

Operative provisions

165‑10  To deduct a tax loss
  A company cannot deduct a *tax loss unless either:
 (a) it meets the conditions in section 165‑12 (which is about the company maintaining the same owners); or
Note: See section 165‑215 for a special alternative to these conditions.
 (b) it meets the condition in section 165‑13 (which is about the company satisfying the business continuity test).
Note: In the case of a widely held or eligible Division 166 company, Subdivision 166‑A modifies how this Subdivision applies, unless the company chooses otherwise.

165‑12  Company must maintain the same owners

Ownership test period
 (1) In determining whether section 165‑10 prevents a company from deducting a *tax loss, the ownership test period is the period from the start of the *loss year to the end of the income year.
Note: See section 165‑255 for the rule about incomplete test periods.

Voting power
 (2) There must be persons who had *more than 50% of the voting power in the company at all times during the *ownership test period.
Note 1: See section 165‑150 to work out who had more than 50% of the voting power.
Note 2: Subdivision 167‑B has special rules for working out voting power in a company whose shares do not all carry the same voting rights, or do not carry all of the voting rights in the company.

Rights to dividends
 (3) There must be persons who had rights to *more than 50% of the company's dividends at all times during the *ownership test period.
Note 1: See section 165‑155 to work out who had rights to more than 50% of the company's dividends.