Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p5
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 5/35)
Character Range: 3224115–3226771

of the capital loss year.
Note: An application event involves either expanding an existing MEC group by including extra eligible tier‑1 companies of the top company for the group or creating a MEC group because more companies become eligible tier‑1 companies of the top company of which the head company of a consolidated group is an eligible tier‑1 company.
 (2) The gain company must have been able to apply the *net capital loss in working out its *net capital gain for the application year assuming that it had made the net capital loss for the capital loss year.
 (3) The condition in subsection (4) of this section applies to the gain company instead of the condition in subsection 170‑140(2) if the conditions in subsections 170‑130(1) and (2) are met in relation to the *loss company and the gain company because of section 170‑133.
 (4) The gain company must have been able to apply the *net capital loss in working out its *net capital gain for the application year assuming that it had made the net capital loss, for the income year in which the loss would have been transferred to it as described in paragraph 170‑133(2)(c), because of one or more transfers under Subdivision 707‑A described in that paragraph.

170‑145  Maximum amount that can be transferred

Loss company can only transfer what it cannot use itself
 (1) The amount transferred cannot exceed what would be the amount of the *loss company's *unutilised *net capital loss at the end of the application year if the loss company utilised the net capital loss to the greatest extent possible.
Note: If the capital loss year and the application year are the same, the whole of the net capital loss would be unutilised, because section 102‑5 does not allow a net capital loss to be applied in the income year in which it was made.
Example: In the application year the loss company has:
• a net capital loss from an earlier income year of $25,000; and
• other capital losses totalling $10,000; and
• capital gains totalling $20,000;
 Of the $25,000 loss, the loss company can transfer to the gain company no more than:

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