Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p20
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 20/46)
Character Range: 3102981–3105609

Note 1: Subdivision 165‑A is about the conditions a company must meet before it can deduct a tax loss for an earlier income year.
Note 2: A company can choose that this Subdivision is not to apply to it: see section 166‑15.
Note 3: See section 165‑255 for the rule about incomplete income years.

Meaning of test period
 (2) The company's test period is the period consisting of the *loss year, the income year and any intervening period.
Note: See section 165‑255 for the rule about incomplete test periods.

Substantial continuity of ownership
 (3) The company is taken to have met the conditions in section 165‑12 (which is about the company maintaining the same owners) if there is *substantial continuity of ownership of the company as between the start of the *test period and:
 (a) the end of each income year in that period; and
 (b) the *end of each *corporate change in that period.
Note: See sections 166‑145 and 166‑175 to work out whether there is substantial continuity of ownership and a corporate change.

No substantial continuity of ownership
 (4) The company is taken to have failed to meet the conditions in section 165‑12 if there is no *substantial continuity of ownership of the company as between the start of the *test period and:
 (a) the end of an income year in that period; or
 (b) the *end of a *corporate change in that period.

Satisfies the business continuity test
 (5) However, if the company satisfies the *business continuity test for the income year (the business continuity test period), it is taken to have satisfied the condition in section 165‑13.
Note 1: For the business continuity test, see Subdivision 165‑E.
Note 2: See section 165‑255 for the rule about incomplete test periods.
 (6) Apply the *business continuity test to the *business that the company carried on immediately before the earlier of the following times (the test time):
 (a) the end of the first income year;
 (b) the first time in the test period that a *corporate change in the company *ends;
for which there is no *substantial continuity of ownership of the company as between the start of the *test period and that time.

166‑15  Companies can choose that this Subdivision is not to apply to them
 (1) The company can choose that Subdivision 165‑A is to apply to it for the income year without the modifications made by this Subdivision.
 (2) The company must choose on or before the day it lodges its *income tax return for the income year, or before a later day if the Commissioner allows.

Subdivision 166‑B—Working out the taxable income, tax loss, net capital gain and net capital loss for the income year