Document ID: chunk:federal_register_of_legislation:C2025C00029:section:6:p3
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 6 (pt 3/5)
Character Range: 3049533–3052276

Division 166 company, Subdivision 166‑C modifies how this Subdivision applies, unless the company chooses otherwise.
Note 2: Normally bad debts are deductible under section 8‑1 or 25‑35.
Note 3: Subdivisions 709‑D and 719‑I modify how this Subdivision operates in relation to a company that used to be a member of a consolidated group or MEC group and that writes off as bad a debt that used to be owed to a member of the group.
 (2) The conditions in section 165‑123 or 165‑126 apply to different periods, depending on whether the debt was incurred in the *current year or an earlier income year:

Meaning of first continuity period and second continuity period
                                                                            the first continuity period:                         and the second continuity period:
In this case:
the debt was incurred in an earlier income year                             • starts on the day when the debt was incurred; and  is the *current year
                                                                            • ends at the end of that income year
the debt was incurred in the *current year (but not on the last day of it)  • starts on the first day of the *current year; and  • starts on the day after the debt was incurred; and
                                                                            • ends on the day when the debt was incurred         • ends on the last day of the *current year

 (3) A company cannot deduct a debt (or part of a debt) that it writes off as bad on the last day of the *current year if the debt was also incurred on that day.

165‑123  Company must maintain the same owners

Ownership test period
 (1) In determining whether section 165‑120 prevents a company from deducting a debt or a part of a debt, the ownership test period is the period from the start of the *first continuity period to the end of the *second continuity period.
Note: See section 165‑255 for the rule about incomplete test periods.

Voting power
 (2) There must be persons who had *more than 50% of the voting power in the company at all times during the *ownership test period.
Note 1: See section 165‑150 to work out who had more than 50% of the voting power.
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.

Rights to dividends
 (3) There must be persons who had rights to *more than 50% of the company's dividends at all times during the *ownership test period.
Note 1: See section 165‑155 to work out who had rights to more than 50% of the company's dividends.
Note 2: Subdivision 167‑A has special rules for working out