Document ID: chunk:federal_register_of_legislation:C2004C00958:clause:1_4:p1
Version: federal_register_of_legislation:C2004C00958
Segment Type: clause
Provision Reference: sch 1 cl 4 (pt 1/8)
Character Range: 565510–568309

4  Section 170‑70 (link note)
Repeal the link note, substitute:

Subdivision 170‑B—Transfer of net capital losses within wholly‑owned groups of companies

Guide to Subdivision 170‑B

170‑101  What this Subdivision is about

      A company can transfer a surplus amount of its net capital loss to another company so that the other company can apply the amount in working out its net capital gain for the income year of the transfer. Both companies must be members of the same wholly‑owned group.

Table of sections

170‑105 Basic principles for transferring a net capital loss

Effect of transferring a net capital loss

170‑110 When a company can transfer a net capital loss
170‑115 Who can apply transferred loss
170‑120 Gain company is taken to have made transferred loss
170‑125 Tax treatment of consideration for transferred tax loss

Conditions for transfer

170‑130 Companies must be in existence and members of the same wholly‑owned group
170‑135 The loss company
170‑140 The gain company
170‑145 Maximum amount that can be transferred
170‑150 Transfer by written agreement
170‑155 Losses must be transferred in order they are made
170‑160 Gain company cannot transfer transferred net capital loss

Effect of agreement to transfer more than can be transferred

170‑165 Agreement transfers as much as can be transferred
170‑170 Amendment of assessments

Effect of transfer on cost base of equity or debt interest held by company in the same wholly‑owned group

170‑175 Direct and indirect interests in the loss company
170‑180 Direct and indirect interests in the gain company

[This is the end of the Guide.]

170‑105  Basic principles for transferring a net capital loss

 (1) A company can transfer a net capital loss (except a net capital loss from collectables) to another company so that the other company can apply it in working out its net capital gain for the income year of the transfer.

 (2) Both companies must be members of the same wholly‑owned group. There are other eligibility requirements that they must also satisfy.

 (3) The transferred loss must be "surplus" in the sense that, for the income year of the transfer, the transferring company does not have enough capital gains against which to apply it. The other company must have enough capital gains against which to apply it.

 (4) Also, it must not exceed the total cost bases (without indexation) of equity and debt interests in the loss company held by companies in the same wholly‑owned group, unless the other company is a 100% subsidiary of the loss company.

 (5) Neither company must be prevented by Subdivision 165‑CA or 175‑CA from applying the loss in working out its net capital gain for the income year of the transfer.

Note: Subdivision 165‑CA deals with the consequences of changing