Document ID: chunk:federal_register_of_legislation:C2004C00958:schedule:2:p2
Version: federal_register_of_legislation:C2004C00958
Segment Type: schedule
Provision Reference: sch 2 (pt 2/4)
Character Range: 884753–887509

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

170‑128  Financial Corporations (Transfer of Assets and Liabilities) Act 1993 must apply to asset transfer from loss company to gain company

  If it were assumed that:

 (a) an asset (within the meaning of the Financial Corporations (Transfer of Assets and Liabilities) Act 1993) had been transferred by the loss company to the gain company on the last day of a particular income year of the loss company (the notional transfer year); and

 (b) the requirements of paragraphs 7(6)(a) and (b) of that Act were satisfied in relation to that transfer;

then it must be the case that that Act would have applied to that transfer.

170‑132  The loss year

  The *loss year must be either:

 (a) the income year in which the Financial Corporations (Transfer of Assets and Liabilities) Act 1993 commenced; or

 (b) an earlier income year.

170‑133  The transfer year

 (1) The *transfer year must either:

 (a) end at the end of the *notional transfer year; or

 (b) correspond to the income year of the *loss company that next follows the *notional transfer year.

 (2) Also, the *transfer year must be one of the 5 income years after the  income year in which the Financial Corporations (Transfer of Assets and Liabilities) Act 1993 commenced.

170‑135  The loss company

 (1) 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).

 (2) 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