Document ID: chunk:federal_register_of_legislation:C2004C00958:clause:3_22
Version: federal_register_of_legislation:C2004C00958
Segment Type: clause
Provision Reference: sch 3 cl 22
Character Range: 897755–899521

22  Subsections 22(2) and (3)
Repeal the subsections, substitute:

Modification of tests for receiving corporation  to deduct bad debt

 (2) In relation to a transfer of a debt, Subdivisions 165‑C, 166‑C and 175‑C of the Income Tax Assessment Act 1997 have effect as if the debt had been incurred at the time of the transfer.

Note: Those Subdivisions are about companies deducting bad debts.

Easing of restrictions on transferring corporation

 (3) If:

 (a) this Act applies to one or more transfers of assets by the transferring corporation to the receiving corporation; and

 (b) an entity incurs a debt to the transferring corporation in a year of income (the debt year); and

 (c) the debt year is the income year in which this section (as originally enacted) commenced or an earlier income year; and

 (d) Subdivision 165‑C or 175‑C, or both, of the Income Tax Assessment Act 1997 prevent the transferring corporation from deducting an amount for the debt for an income year (the deduction year); and

 (e) the transferring corporation did not, at any time in the deduction year, derive income from:

 (i) a business of a kind that it did not carry on; or

 (ii) a transaction of a kind that it had not entered into in the course of its business operations;

  before the transfer, or the earliest of the transfers, occurred;

neither Subdivision 165‑C nor 175‑C of that Act  prevents the transferring corporation from deducting that amount.

Note: Subdivision 165‑C of the Income Tax Assessment Act 1997 is about the conditions that a company needs to satisfy before it can deduct a bad debt.

 Subdivision 175‑C of that Act is about the Commissioner preventing a company from getting certain tax benefits through its unused bad debts.