Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p17
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 17/35)
Character Range: 3252465–3255031

base are increased by an amount that is appropriate having regard to:
 (aa) the matters mentioned in subsections 170‑205(3) and (4); and
 (ab) the amounts of any reductions to the cost base and reduced cost base of *shares, and to the reduced cost base of debts, under subsection 170‑220(3); and
 (a) the group company's direct or indirect interest in the gain company; and
 (b) the amount of the loss transferred; and
 (c) any consideration given by the gain company for the loss transferred.
Note: This is because the consideration may be less than the commercial value of the loss transferred.
 (4) However, the increase cannot exceed the increase in the *market value of the *share or debt that results from the transfer of the loss. (If no increase in that market value results, for example because the consideration paid for the transfer of the loss equals the commercial value of the loss transferred, then there is no increase in the *cost base and *reduced cost base.)
 (4A) No increase is to be made to the extent that the *net capital loss transferred does not represent an outlay or loss of any of the economic resources of the company that transferred the net capital loss.
Note: Where the income tax law allows, as all or part of a loss, an amount for the decline in value of a depreciating asset that exceeds the actual economic depreciation or depletion of the asset concerned, the excess is not to be regarded for the purposes of this subsection as representing an outlay or loss of economic resources of the company.
 (5) Any increase is to be made immediately before a *CGT event happens in relation to the share or debt and is to have effect from that time or the end of the application year, whichever is the earlier.
Note: This subsection is relevant for indexing elements of a cost base (see sections 114‑1 and 114‑15).
 (6) No increase is to be made to the *cost base and *reduced cost base of a share or debt to the extent to which, because of a dividend or dividends paid by the gain company, the increase in the *market value of the share or debt that resulted from the transfer of the loss is no longer in existence at the time when a *CGT event happens in relation to the share or debt.
Note: Increases under former subsections 160ZP(14) and (15) of the Income Tax Assessment Act 1936 are also relevant: see section 170‑225 of the Income Tax (Transitional Provisions) Act 1997.

Subdivision 170‑D—Transactions by a company that is a member of a linked group

Guide to Subdivision 170‑D

170‑250  What this Subdivision is about
      This