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Everything There is to Know About Company Losses and Tax

Published on 27 May 2009 | Took place at RACV Club, Melbourne, VIC

This event gave delegates knowledge to advise companies interested in protecting their positions or attempting to value the losses that stand to be acquired through M&A activity.

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Individual sessions

The continuity of ownership test under Division 165

Author(s):  Andrew VAN DINTER,  Brian LANE

This paper covers the continuity of ownership (COT) under Division 165, including:

  • the differences in testing for tax losses, net capital losses and bad debt deductions
  • the concepts of voting power, dividend rights and capital rights, and how they raise difficulties for companies with multiple classes of shares
  • how the same share rule can make it more difficult to utilise a loss (together with the saving exception to the rule)
  • when it is "reasonable" in tracing ownership to conclude that the COT has been satisfied.
Materials from this session:

The same business test under Division 165

Author(s):  Andrew WOOLLARD,  Brian LANE

This paper covers the same business test (SBT) under Division 165, including:

  • when is it "practicable" to assume COT failure?
  • the issues raised by the new business and transactions tests
  • what exactly is the ATO's position under Taxation Ruling TR 1999/9?
  • a review of the recent case law, including R & D Holdings, Lilyvale Hotel and Coal Developments (German Creek).
Materials from this session:

Losses and tax - The loss integrity measures

Author(s):  Enzo COIA

This paper covers the following integrity measures:

  • inter-entity loss duplication under Subdivision 165-CD, including the following issues:
    • how the ATO's view of duplication differs from the general view?
    • what is an economic loss?
    • the differences between the individual and global approaches to asset measurement
  • the same business test for unrealised losses under Subdivision 165-CC and
  • loss deferral under Subdivision 170-D.
Materials from this session:

Recouping tax losses under Division 166

Author(s):  Martin FRY,  Jeanelle MENEZES

This paper covers:

  • the role of Division 166
  • the companies to whom Division 166 applies
  • how Division 166 modifies the basic continuity of ownership test
  • corporate change
  • the tracing concessions
  • the stakeholder thresholds of the concessional tracing rules
  • the no detriment rule: section 166-275
  • interposition of a new entity between notional shareholders.
Materials from this session:

Losses and consolidation - Entries and exits

Author(s):  Duncan R C BAXTER

This paper covers the losses issues raised when an entity joins or leaves a consolidated group, including:

  • do losses transfer into a consolidated group?
  • how is a transferred loss utilised (as compared with other losses)?
  • calculating and allocating the joining ACA for a loss company and
  • calculating the cost base of the shares in a leaving company (including a consideration of whether a loss on a share sale can ever result).
Materials from this session: