Commonwealth Consolidated Acts

INCOME TAX (TRANSITIONAL PROVISIONS) ACT 1997 - SECT 770.5

             (1)  An entity has a loss to which this section applies (a convertible foreign loss ) for an earlier income year covered by subsection (2) if:

                     (a)  the entity has incurred an overall foreign loss in respect of a class of assessable foreign income (within the meaning of former section 160AFD of the 1936 Act) for the earlier income year; and

                     (b)  a positive amount (an unutilised overall foreign loss amount ) remains after reducing the overall foreign loss to the extent that it has been taken into account under that former section in reducing the entity's assessable foreign income of the relevant class for an income year before the commencement year; and

                     (c)  a positive amount (a reduced unutilised overall foreign loss amount ) remains after reducing the unutilised overall foreign loss amount under section 770-10.

Note 1:       For the classes of income, see former subsection 160AFD(8) of the 1936 Act.

Note 2:       There is a modification to this rule for losses transferred to a head company of a consolidated group: see subsection 770-80(2).

Note 3:       Former section 160AFD of the 1936 Act allowed a past foreign loss to reduce assessable foreign income of the same class.

             (2)  The income year must be one of the most recent 10 income years ending before the commencement year.

             (3)  The amount of the convertible foreign loss for the earlier year is the sum of the reduced unutilised overall foreign loss amounts for all classes of assessable foreign income for the earlier year.