Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p1
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 1/46)
Character Range: 3056901–3059651

3          All these conditions are met:                                                                                                                                The start of the current year
           (a) item 1 does not apply;
           (b) the debt was incurred in the *current year;
           (c) the company was in being throughout the current year

For the business continuity test: see Subdivision 165‑E.

165‑129  Same people must control the voting power, or the company must satisfy the business continuity test
 (1) Even if section 165‑120 does not prevent a company from deducting a bad debt (or part of one), it cannot deduct the bad debt (or that part of it) if:
 (a) for some or all of the part of the *ownership test period that started at the end of the *first continuity period, a person controlled, or was able to control, the voting power in the company (whether directly, or indirectly through one or more interposed entities); and
 (b) for some or all of the *first continuity period, that person did not control, and was not able to control, that voting power (directly, or indirectly in that way); and
 (c) that person began to control, or became able to control, that voting power (directly, or indirectly in that way) for the purpose of:
 (i) getting some benefit or advantage in relation to how this Act applies; or
 (ii) getting such a benefit or advantage for someone else;
  or for purposes including that purpose.
Note 1: A person can still control the voting power in a company that is in liquidation etc.: see section 165‑250.
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.
 (2) However, that person's control of the voting power, or ability to control it, does not prevent the company from deducting the bad debt (or that part of it) if the company satisfies the *business continuity test for the *second continuity period (the business continuity test period).
 (3) Apply the *business continuity test to the *business that the company carried on immediately before the time (the test time) when the person began to control that voting power, or became able to control it.
For the business continuity test: see Subdivision 165‑E.

165‑132  When tax losses resulting from bad debts cannot be deducted
 (1) If:
 (a) a company can deduct a debt (or part of a debt) that it wrote off as bad in an income year; and
 (b) because the company failed to meet a condition in section 165‑123 (about the company maintaining the same owners), it could not have deducted the debt (or part) apart from section 165‑126 (about the company satisfying the business continuity