Document ID: chunk:federal_register_of_legislation:C2004C00958:clause:1_4:p3
Version: federal_register_of_legislation:C2004C00958
Segment Type: clause
Provision Reference: sch 1 cl 4 (pt 3/8)
Character Range: 570423–573194

loss company does not make a *capital gain because of receiving the consideration.

Note: However, the consideration may affect how section 170‑175 modifies the cost base of direct and indirect interests in the loss company.

 (2) If the gain company gives consideration to the loss company for the transferred amount:

 (a) the gain company cannot deduct the consideration; and

 (b) the gain company does not make a *capital loss because of giving the consideration.

Note: However, the consideration may affect how section 170‑175 modifies the cost base of direct and indirect interests in the gain company.

Conditions for transfer

170‑130  Companies must be in existence and members of the same wholly‑owned group

 (1) Both companies must be *in existence during at least part of each of the following income years:

 (a) the capital loss year; and

 (b) the application year; and

 (c) any intervening income year.

 (2) Also, both companies must be members of the same *wholly‑owned group at all times during those income years when both companies were *in existence.

170‑135  The loss company

 (1) The loss company:

 (a) must be an Australian resident throughout the capital loss year; and

 (b) must not be a *dual resident investment company in either the capital loss year or the application year.

 (2) It must be the case that the loss company was not required to calculate the *net capital loss:

 (a) under section 165‑114 (because of a change in ownership or control); or

 (b) under section 175‑75 (because of an injected capital gain or loss).

 (3) Also, it must be the case that neither Subdivision 165‑CA nor Subdivision 175‑CA would have prevented the loss company from applying the *net capital loss in working out its *net capital gain for the application year if it had made enough capital gains in that year.

Note 1: Subdivision 165‑CA deals with the consequences of changing ownership or control of a company. Subdivision 175‑CA deals with using a company's net capital losses to avoid income tax.

Note 2: A company's net capital gain or net capital loss for an income year is usually worked out under section 102‑5.

170‑140  The gain company

 (1) The gain company must be an Australian resident throughout the application year.

 (2) If the capital loss year and the application year are not the same, the gain company must not be prevented by Subdivision 165‑CA or 175‑CA from applying the transferred amount in working out its *net capital gain for the application year.

Note 1: Subdivision 165‑CA deals with the consequences of changing ownership or control of a company. Subdivision 175‑CA deals with using a company's net capital losses to avoid income tax.

Note 2: A company's net capital gain or