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INCOME TAX ASSESSMENT ACT 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-5 - RULES ABOUT DEDUCTIBILITY OF PARTICULAR KINDS OF AMOUNTS  

Division 36 - Tax losses of earlier income years  

Subdivision 36-B - Effect of you becoming bankrupt  

Operative provisions

SECTION 36-40  Deduction for amounts paid for debts incurred before bankruptcy  

Tax losses generally

36-40(1)  

 ITAA 36
If:


(a) you pay an amount in the income year for a debt that you incurred in an earlier income year; and


(b) you have a *tax loss covered by section 36-35 for that earlier income year;
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you can deduct the amount paid, but only to the extent that it does not exceed so much of the debt as the Commissioner is satisfied was taken into account in calculating the amount of the tax loss.

Film losses

36-40(2)  

 ITAA 36
If:


(a) you pay an amount in the income year for a debt that you incurred in an earlier income year; and


(b) you incurred the debt in the course of deriving or gaining *assessable film income or *exempt film income; and


(c) you also incurred a *film loss covered by section 36-35 in that earlier income year;
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you can deduct the amount paid, but only to the extent that it does not exceed so much of the debt as the Commissioner is satisfied was taken into account in calculating the amount of the film loss.

36-40(3)  

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A film loss is the *film component (if any) of a *tax loss.

36-40(4)  

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Your *tax loss for an income year has a film component if your *film deductions for the year exceed the sum of:


(a) your *assessable film income for the year; and


(b) your *net exempt film income for the year.

The amount of the film component is the excess or the tax loss, whichever is lesser.

36-40(5)  

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However, if your *tax loss worked out under a provision listed in the table, the film component is what the tax loss would have been if:


(a) your *film deductions for the *loss year had been your only deductions; and


(b) your *assessable film income for the loss year had been your only assessable income; and


(c) your *net exempt film income for the loss year had been your only *net exempt income.

However, the film component cannot exceed the actual tax loss.
Working out film component of tax loss
ItemProvisionType of entity
1165-70Company - income year when ownership or control changed
2175-35Company - deductions that have been used to obtain a tax benefit disallowed
3268-60 in Schedule 2F to the Income Tax Assessment Act 1936Trust - income year when ownership or control changed


 



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