Document ID: chunk:federal_register_of_legislation:C2004C00958:clause:1_4:p5
Version: federal_register_of_legislation:C2004C00958
Segment Type: clause
Provision Reference: sch 1 cl 4 (pt 5/8)
Character Range: 575421–578168

debt that the loss company owes at the end of the application year, for money it *borrowed, to a company that:

 (i) was a member of the same *wholly‑owned group as the loss company throughout the application year (disregarding a period when either was not *in existence); and

 (ii) *acquired the debt on or after 20 September 1985.

 (3) No amount can be transferred if there is no such share or debt.

 (4) Subsections (2) and (3) do not apply if the gain company is a *100% subsidiary of the loss company throughout the application year (disregarding a period when either was not *in existence).

Transferred loss must not exceed what the gain company can use

 (5) No amount can be transferred if, apart from the operation of this section, the gain company would not have a *net capital gain for the application year.

 (6) The amount transferred also cannot exceed the amount worked out as follows:

      Method statement

           Step 1.  Work out what, apart from the operation of this section, would have been the gain company's *net capital gain for the application year.

           Step 2. Subtract each amount that:

                (a) the gain company can apply under section 170‑115 in working out its *net capital gain for the application year; and

                (b) was transferred to the gain company (by the loss company or any other company) by an agreement made before the agreement by which the first amount is transferred.

Example: In the application year:

                  * the gain company has capital gains totalling $60,000 and capital losses totalling $25,000; and

                  * another company, being a member of the same wholly‑owned group as the gain company, transferred a net capital loss of $15,000 to the gain company; and

                  * the loss company incurred a net capital loss of $50,000.

 Of the $50,000 loss, the loss company can transfer to the gain company no more than:

170‑150  Transfer by written agreement

 (1) The transfer must be made by a written agreement between the loss company and the gain company.

 (2) The agreement must:

 (a) specify the income year of the transfer (which may be earlier than the income year in which the agreement is made); and

 (b) specify the amount of the *net capital loss being transferred; and

 (c) be signed by the public officer of each company; and

 (d) be made on or before the day of lodgment of the gain company's *income tax return for the application year, or within such further time as the Commissioner allows.

Note: The agreement will usually be made in the next income year after the one for which the gain company will apply the loss.

170‑155  Losses must be transferred in order they are