Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 707.125

  (1)   This section operates if:

  (a)   the joining entity made the loss for an income year starting after 30   June 1999; and

  (b)   section   165 - 13 or subsection   165 - 15(2) or (3) or 166 - 5(5) or (6) is relevant to working out (under section   707 - 120) whether the loss is transferred from the joining entity.

  (2)   Work out whether the loss is transferred on the basis that section   165 - 13 required the joining entity to satisfy the * business continuity test for:

  (a)   the period (the business continuity test period ) consisting of:

  (i)   the * trial year; and

  (ii)   the income year that included the * test time worked out for section   165 - 13 for the joining entity (disregarding paragraph   (b) of this subsection), if that income year started before the trial year; and

  (b)   the time (the test time ) just before the end of the income year for which the loss was made by the joining entity.

  (3)   Work out whether the loss is transferred on the basis that:

  (a)   subsection   165 - 15(2) specified that the period (the business continuity test period ) for the * business continuity test consisted of:

  (i)   the * trial year; and

  (ii)   the income year in which the person began to control, or became able to control, the voting power in the company, if that income year started before the trial year; and

  (b)   subsection   165 - 15(3) required the business continuity test to be applied to the company's business immediately before the time (the test time ) just before the end of the income year for which the loss was made by the joining entity.

  (4)   If Subdivision   166 - A would apply to the joining entity for an income year consisting of the * trial year, work out whether the loss is transferred on the basis that:

  (a)   subsection   166 - 5(5) treated the joining entity as having satisfied the condition in section   165 - 13 if the joining entity satisfied the * business continuity test for the period (the business continuity test period ) consisting of:

  (i)   the trial year; and

  (ii)   the income year described in subsection   (5) of this section, if that income year started before the trial year; and

  (b)   subsection   166 - 5(6) required the business continuity test to be applied to the * business that the joining entity carried on at the time (the test time ) just before the end of the income year for which the loss was made by the joining entity.

Note:   Subdivision   166 - A applies to widely held companies and eligible Division   166 companies unless they choose that Subdivision   165 - A apply to them without the modifications made by Subdivision   166 - A.

  (5)   For the purposes of subparagraph   (4)(a)(ii), the income year is:

  (a)   the income year in which occurred the first time mentioned in subsection   166 - 5(6); or

  (b)   the income year of the joining entity containing the time at which the joining entity is taken under subsection   707 - 210(5) to fail to meet the condition in section   165 - 12, if that subsection is relevant to working out whether the joining entity can * utilise the loss.

Note 1:   Section   707 - 205 affects the start of the test period if the joining entity made the loss under a previous operation of this Subdivision.

Note 2:   Section   707 - 210 is about whether a company can utilise certain losses transferred to it under this Subdivision from a company.

  (6)   Subsection   (4) of this section has effect despite subsection   707 - 210(6).

Note:   Subsection   707 - 210(6) modifies section   166 - 5 for working out whether a company can utilise certain losses transferred to it under this Subdivision from a company.