Document ID: chunk:federal_register_of_legislation:C2025C00029:section:45:p2
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 45 (pt 2/4)
Character Range: 1492602–1495028

priorities set out in Division 63 as if it were a tax offset for that later year.
 (3) Before you apply a *tax offset to reduce the amount of income tax that you pay in a later income year in which you have a taxable income, you must apply it to reduce to nil any *net exempt income for:
 (a) that later income year; or
 (b) any income year after the year in which the tax offset arose and before the later income year in which you had a taxable income but did not apply the tax offset to reduce the amount of income tax you had to pay.
Note: Paragraph (b) would apply to cases such as where your taxable income was below your tax‑free threshold or where you had other tax offsets that reduced your income tax to nil.
 (3A) In reducing *net exempt income for an income year under subsection (3):
 (a) if you were a base rate entity (within the meaning of the Income Tax Rates Act 1986) for the year—each 25 cents of *tax offset reduces the net exempt income by $1; or
 (b) otherwise—each 30 cents of tax offset reduces the net exempt income by $1.
 (4) You can only apply a *tax offset that you have carried forward to the extent that it has not already been applied.
Note: Section 65‑40 contains special restrictions on applying carried forward tax offsets.

65‑40  When a company cannot apply a tax offset
 (1) In working out its *tax offset for the *current year, a company cannot apply a *tax offset it has carried forward if, assuming:
 (a) the tax offset were a *tax loss of the company for the income year in which it became entitled to the tax offset; and
 (b) section 165‑20 (deducting part of a tax loss) were disregarded;
Subdivision 165‑A would prevent the company from deducting it for the current year.
Note: Subdivision 165‑A deals with the deductibility of a company's tax loss for an earlier income year if there has been a change in the ownership or control of the company in the loss year or the income year.
 (2) If subsection (1) prevents the company from applying the *tax offset, it can apply the part of the tax offset that it is reasonable to consider relates to a part of the income year in which it became entitled to the tax offset, but only if, assuming that part of that income year had been treated as the whole of it, the company would have been entitled to apply the tax offset.

65‑50  Effect of bankruptcy
 (1) If during the *current year:
 (a) you became bankrupt; or
 (b) you were released