Document ID: chunk:federal_register_of_legislation:C2004C00958:clause:1_6:p1
Version: federal_register_of_legislation:C2004C00958
Segment Type: clause
Provision Reference: sch 1 cl 6 (pt 1/6)
Character Range: 584468–587168

6  Subdivision 175‑D
Repeal the Subdivision, substitute:

Subdivision 175‑CA—Tax benefits from unused net capital losses of earlier income years

Table of sections

175‑40 When Commissioner can disallow net capital loss of earlier income year
175‑45 First case: capital gain injected into company because of available net capital loss
175‑50 Second case: someone else obtains a tax benefit because of net capital loss available to company

175‑40  When Commissioner can disallow net capital loss of earlier income year

 (1) This Subdivision sets out cases where the Commissioner may prevent a company, in working out its *net capital gain or *net capital loss for an income year, from applying some or all of a *net capital loss it has for an earlier income year (or of part of one) (the excluded loss). This is called disallowing the excluded loss.

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

 (2) However, the Commissioner cannot *disallow the *excluded loss if, in determining (under section 165‑96) whether Subdivision 165‑A would prevent the company from deducting the loss (or the part of the loss) for the income year if the loss were a *tax loss of the company for that earlier income year, the company:

 (a) would fail to meet a condition in section 165‑12 (which is about the company maintaining the same owners) in respect of the income year; but

 (b) would meet the condition in section 165‑13 (which is about the company carrying on the same *business) in respect of the income year.

Note: Subdivision 165‑A deals with the deductibility of a company's tax loss for an earlier income year if there has been a change in the ownership or control of the company in the loss year or the income year.

175‑45  First case: capital gain injected into company because of available net capital loss

 (1) The Commissioner may *disallow the *excluded loss if, during the income year, the company made a *capital gain some or all of which (the injected capital gain) it would not have made if the excluded loss had not been available to be applied in working out the company's *net capital gain or *net capital loss for the income year (or for some other income year).

 (2) However, the Commissioner cannot *disallow the *excluded loss if the *continuing shareholders will benefit from the making of the injected capital gain to an extent that the Commissioner thinks fair and reasonable having regard to their respective rights and interests in the company.

 (3) The continuing shareholders are:

 (a) all of the persons who had *more than 50% of the voting power in the company during the whole (or