Document ID: chunk:federal_register_of_legislation:C2016C00633:section:3:p1
Version: federal_register_of_legislation:C2016C00633
Segment Type: section
Provision Reference: s 3 (pt 1/2)
Character Range: 30018–32650

3                                               the transferring corporation bought the debt in the ordinary course of its business of lending money                          the receiving corporation had bought the debt in the ordinary course of a business of lending money

Modification of tests for receiving corporation to deduct bad debt
 (2) In relation to a transfer of a debt, Subdivisions 165‑C, 166‑C, 175‑C, 709‑D and 719‑I of the Income Tax Assessment Act 1997 have effect as if the debt had been incurred at the time of the transfer.
Note: Those Subdivisions are about companies deducting bad debts.

Easing of restrictions on transferring corporation
 (3) If:
 (a) this Act applies to one or more transfers of assets by the transferring corporation to the receiving corporation; and
 (b) an entity incurs a debt to the transferring corporation in a year of income (the debt year); and
 (c) the debt year is the income year in which this section (as originally enacted) commenced or an earlier income year; and
 (d) any one or more of Subdivisions 165‑C, 175‑C, 709‑D and 719‑I of the Income Tax Assessment Act 1997 prevent the transferring corporation from deducting an amount for the debt for an income year (the deduction year); and
 (e) the transferring corporation did not, at any time in the deduction year, derive income from:
 (i) a business of a kind that it did not carry on; or
 (ii) a transaction of a kind that it had not entered into in the course of its business operations;
  before the transfer, or the earliest of the transfers, occurred;
none of those Subdivisions prevents the transferring corporation from deducting that amount.
Note: Subdivision 165‑C of the Income Tax Assessment Act 1997 is about the conditions that a company needs to satisfy before it can deduct a bad debt.
 Subdivision 175‑C of that Act is about the Commissioner preventing a company from getting certain tax benefits through its unused bad debts.
 Subdivision 709‑D of that Act is about the conditions that must be met for an entity to deduct a bad debt that has for a period been owed to a member of a consolidated group and has for another period been owed to an entity that was not a member of that group for the period.
 Subdivision 719‑I of that Act is about the conditions that must be met for an entity to deduct a bad debt that has for a period been owed to a member of a MEC group.

Limit on deductions for partly written‑off debt
 (4) If this Act applies to the transfer of a debt that has been partly written off, the maximum that the receiving corporation can deduct for the debt for one or more years of income