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INCOME TAX ASSESSMENT ACT 1997 - SECT 165.115A

Application of Subdivision

Application

  (1)   This Subdivision applies to a company if:

  (a)   a changeover time has occurred or occurs in relation to the company after the commencement time; and

  (b)   at the changeover time the company had an unrealised net loss (see section   165 - 115E); and

  (c)   either of the following applies:

  (i)   the company makes a * capital loss, or apart from this Subdivision would be entitled to a deduction, in respect of a * CGT event that happens to a * CGT asset referred to in subsection   (1A);

  (ii)   the company makes a * trading stock loss in respect of a CGT asset referred to in subsection   (1A) that is an item of * trading stock; and

  (d)   the company would not, at the changeover time, satisfy the maximum net asset value test under section   152 - 15.

CGT assets in respect of which Subdivision applies

  (1A)   The * CGT assets for the purposes of paragraph   (1)(c) are:

  (a)   any CGT asset that the company owned at the changeover time; and

  (b)   any CGT asset that the company did not own at the changeover time but had owned at a previous time, where:

  (i)   a deferral event referred to in subsection   170 - 255(1) happened before the changeover time; and

  (ii)   the deferral event involved the company as the originating company referred to in that subsection; and

  (iii)   the deferral event would have resulted in the company making a * capital loss, or becoming entitled to a deduction, in respect of the CGT asset except for section   170 - 270; and

  (iv)   the company is not taken to have made a capital loss at or before the changeover time, or to have become entitled to a deduction at that time, under section   170 - 275 in respect of the asset.

Company may choose to disregard CGT assets acquired for less than $10,000

  (1B)   A company may choose, for the purposes of the application of this Subdivision to it in respect of a particular changeover time, that every * CGT asset that has been acquired by it for less than $10,000 is to be disregarded.

    However, the choice does not affect the application of the * global method of working out whether the company has an unrealised net loss (see subsection   165 - 115E(2)).

Time for making choice

  (1C)   A choice under subsection   (1B) must be made on or before:

  (a)   the day on which the company lodges its * income tax return for the income year in which the relevant changeover time occurred; or

  (b)   such later day as the Commissioner allows.

Trading stock loss

  (1D)   A company is taken to have made a trading stock loss in respect of an asset that is an item of * trading stock if, and only if:

  (a)   one of the following applies:

  (i)   the company * disposes of the item;

  (ii)   the item stops being trading stock (within the meaning of section   70 - 80);

  (iii)   the item is revalued under Division   70; and

  (b)   if subparagraph   (a)(i) or (ii) applies--the item's * market value at the time when it is disposed of or stops being trading stock is less than:

  (i)   in respect of an item that has been valued under Division   70--its latest value under the Division; or

  (ii)   otherwise--its cost at that time; and

  (c)   if subparagraph   (a)(iii) applies--the item's value under the revaluation is less than:

  (i)   in respect of an item that has previously been valued under Division   70--its latest value under that Division before the revaluation; or

  (ii)   otherwise--its cost at the time of the revaluation.

    The difference worked out under paragraph   (b) or (c), as the case may be, constitutes the amount of the * trading stock loss.

Commencement time

  (2)   For the purposes of this Subdivision, the commencement time of a company is:

  (a)   if the company was in existence at 1 pm (by legal time in the Australian Capital Territory) on 11   November 1999--that time; or

  (b)   if the company came into existence after that time--the time when it came into existence.

Reference time

  (2A)   For the purposes of the application of this Subdivision to a company in relation to a particular time (the test time ), the reference time is:

  (a)   if no changeover time occurred in respect of the company before the test time--the commencement time; or

  (b)   otherwise--the time immediately after the last changeover time that occurred in respect of the company before the test time.

Asset owned at more than one changeover time

  (3)   If:

  (a)   2 or more changeover times have occurred or occur in relation to a company; and

  (b)   the company owned a particular asset at more than one of those changeover times;

this Subdivision applies to the company in respect of that asset only in relation to the later or latest of those changeover times.

Note:   For changeover time see sections   165 - 115C and 165 - 115D.



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