Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) This section applies if:
(a) a loss gives rise to:
(i) a deduction for an entity (the payer ) for an income year; or
(ii) a * foreign income tax deduction for an entity (also the payer ) for a * foreign tax period; and
(b) in working out the amount of the loss:
(i) all or a part of a payment made, or to be made, to one or more other entities is taken into account; or
(ii) 2 or more payments made, or to be made, to one or more other entities are taken into account.
Note: This section also applies to losses from Division 230 financial arrangements: see section 832 - 780.
Payments made to only one entity
(2) If, in working out the amount of the loss, a payment or payments made to only one entity (the recipient ) are taken into account, this Division applies as if:
(a) at the end of the income year or * foreign tax period identified in paragraph (1)(a), the payer made a payment to the recipient; and
(b) the amount of the payment was equal to the amount of the deduction or * foreign income tax deduction; and
(c) the payment gave rise to the deduction or foreign income tax deduction.
Payments made to 2 or more entities
(3) If, in working out the amount of the loss, a payment or payments made to 2 or more entities (each of which is a recipient ) are taken into account, this Division applies as if:
(a) at the end of the income year or * foreign tax period identified in paragraph (1)(a), the payer made a payment to each recipient; and
(b) the amount of each payment was equal to so much of the amount of the deduction or * foreign income tax deduction as is reasonable having regard to the amounts of the payments actually made to the recipients; and
(c) the payment gave rise to a deduction or foreign income tax deduction equal to the amount of the payment.
Working out whether the payment has been subject to tax
(4) In working out for the purposes of this Division the extent to which a payment that is taken by this section to have been made is * subject to Australian income tax or * subject to foreign income tax, regard is to be had to the actual payments made to the recipient.