Document ID: chunk:federal_register_of_legislation:C2025C00029:section:5:p1
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 5 (pt 1/4)
Character Range: 6076813–6079539

5                        The debt test period:                                                                                                                                   Just before the start of the debt test period  Just after the end of the debt test period
                         (a) starts when the entity that is owed the debt for the period ceases to be a *member of a *consolidated group; and
                         (b) ends later when the entity becomes a member of a consolidated group

 (5) For the purposes of subsection (2), the modified provisions have effect as if section 267‑25 in Schedule 2F to the Income Tax Assessment Act 1936 applied in relation to debts whether they were incurred in the income year or an earlier income year.

Test time for business continuity test under section 165‑126
 (6) For the purposes of subsection (2), the modified provisions have effect as if subsection 165‑126(2) specified that the test time were the later of these times (or either of them if they are the same):
 (a) the first time at which it is not practicable to show that the company will meet the conditions in section 165‑123 (as modified by this section);
 (b) the time just after the start of the debt test period.

Business at and just after the end of the debt test period
 (7) If:
 (a) the debt test period ends when the entity that was owed the debt for the period becomes a *member of a *consolidated group; and
 (b) under the modified provisions, the *business that the entity carried on at or just after the end of the period is relevant to the question whether the entity could have deducted the debt as described in subsection (2);
those provisions have effect for the purposes of that subsection as if the entity carried on at those times the business it carried on just before the end of the period.

Extension of Subdivision to debt/equity swap loss

709‑220  Limit on deduction of swap loss

Object
 (1) The object of this section is to limit the circumstances in which an entity can deduct a swap loss (as defined in section 63E of the Income Tax Assessment Act 1936) resulting from a debt/equity swap (as defined in that section) to circumstances similar to those in which this Subdivision lets an entity deduct a debt it writes off as bad.

Modified operation of sections 709‑205, 709‑210 and 709‑215
 (2) Sections 709‑205, 709‑210 and 709‑215 (except subsection 709‑215(2)) apply in relation to the extinction (however described) of a debt as part of a debt/equity swap in the same way as they apply in relation to the writing off of a debt as bad.
 (3) Subsection 709‑215(1):
 (a) applies in relation to a swap loss from a debt/equity swap in the same way as it applies in relation to