Document ID: chunk:federal_register_of_legislation:C2025C00029:section:6:p1
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 6 (pt 1/16)
Character Range: 359089–361964

6                                         An entity that used to be a member of a consolidated group or MEC group can deduct a bad debt that used to be owed to a member of the group only if certain conditions are met                               Subdivisions
                                                                                                                                                                                                                                                       709‑D and 719‑I

Note: Subsections 230‑180(3), (5) and (6) and 230‑195(3), (5) and (6) provide that in certain circumstances a deduction for a loss in relation to a financial arrangement is to be treated, for the purposes of this Act, as a deduction of a bad debt. The rules referred to in this subsection apply to that deduction.

25‑40  Loss from profit‑making undertaking or plan
 (1) You can deduct a loss arising from the carrying on or carrying out of a profit‑making undertaking or plan if any profit from that plan would have been included in your assessable income by section 15‑15 (which is about profit‑making undertakings and plans).

When section does not apply
 (2) You cannot deduct a loss under subsection (1) if the loss arises in respect of the sale of property acquired on or after 20 September 1985.
Note: If you sell property you acquired before 20 September 1985 for profit‑making by sale, you may be able to deduct a loss on the sale: see section 52 of the Income Tax Assessment Act 1936.

Notice to Commissioner
 (3) You can deduct a loss under subsection (1), insofar as it arises in respect of property, only if:
 (a) you notified the Commissioner that you acquired the property for the purpose of profit‑making by sale or for the carrying on or carrying out of any profit‑making undertaking or plan (however described); or
 (b) the Commissioner is satisfied that you acquired the property for either of those purposes.

When notice must have been given
 (4) The notice must have been given at or before the time you lodged your *income tax return:
 (a) for the income year in which you acquired the property; or
 (b) if you were not required to lodge an income tax return for that income year—for the first income year after that income year for which you were required to lodge one.

25‑45  Loss by theft etc.
  You can deduct a loss in respect of money if:
 (a) you discover the loss in the income year; and
 (b) the loss was caused by theft, stealing, embezzlement, larceny, defalcation or misappropriation by your employee or *agent (other than an individual you employ solely for private purposes); and
 (c) the money was included in your assessable income for the income year, or for an earlier income year.
Note: If you receive an amount as recoupment of the loss, the amount may be included in your assessable income: see Subdivision