Document ID: chunk:federal_register_of_legislation:C2025C00029:section:3:p41
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 3 (pt 41/45)
Character Range: 6010514–6013282

of a transferred loss that the transferee can *utilise is to reflect the amount of the loss that the transferor could have *utilised for the income year if the transferor of the loss (whether the original maker of the loss or not) had not become a *member of a *consolidated group at the time of the transfer.
 (4) To give effect to those principles, this Subdivision operates on the assumption that, if each transferor of a loss to the transferee had not become a *member of a *consolidated group at the time of the transfer:
 (a) all the transferors of transferred losses to the transferee would have made income or gains for the year whose total did not exceed the transferee's income or gains for the year remaining after reduction by its other losses and deductions; and
 (b) a particular transferor's income or gains for the year would have equalled a fraction of the transferee's income or gains for the year remaining after reduction by its other losses and deductions.
 (5) The fraction is worked out by reference to the transferor's *market value at the time of the transfer (on the assumption that market value reflects capacity to generate income or gains in future).

How much of a transferred loss can be utilised?

707‑310  How much of a transferred loss can be utilised?
 (1) This section limits the amount of losses in a particular *bundle of losses transferred under Subdivision 707‑A that can be *utilised by the transferee. The limit is set by reference to the *available fraction for the bundle.
Note: Section 707‑335 of this Act and section 707‑350 of the Income Tax (Transitional Provisions) Act 1997 set different limits on utilising losses in a bundle of losses in certain circumstances.

Basic rule
 (2) The transferee cannot *utilise more of the losses in the *bundle than the transferee would have been able to utilise (apart from this section) under the conditions in subsections (3), (4) and (5).
 (3) The first condition is that the only amount of the transferee's *ordinary income, *statutory income or gains (if any) of a kind described in column 1 of an item of the table for the income year is the *available fraction of the amount worked out as described in column 2 of the item having regard to:
 (a) the transferee's *ordinary income, *statutory income or gains for the income year apart from this section; and
 (b) the transferee's deductions for the income year and losses, except losses transferred to the transferee under Subdivision 707‑A.

Income and gains
Column 1                                                                                             Column 2
The transferee's ordinary income, statutory income or gains of this kind:                            Are worked out by reference to this amount:
  1 *Capital