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Australia Issues Exposure Draft on Relaxing Access to Past Losses after Change of Ownership for Public Consultation — Orbitax Tax News & Alerts

On 6 April 2016, the Australian Treasury published exposure draft legislation that would allow businesses that have changed ownership to access past year tax losses if they satisfy a similar business test instead of the same business test. The same business test would still exist, but would be supplemented by the new similar business test to determine access to past losses and for certain other purposes where the same business test currently applies.

Under the proposed similar business test, a company that has undergone a change of ownership or control may access losses from years preceding that change if its current business is a similar business to its former business, having regard to:

  • The extent to which the assets (including goodwill) that are used in its current business to generate assessable income were also used in the company’s former business to generate assessable income;
  • The extent to which the sources from which the current business generates assessable income were also the sources from which the former business generated assessable income; and
  • Whether any changes to the former business are changes that would reasonably be expected to have been made to a similarly placed business.

If adopted, the new similar business test would apply for income years beginning on or after 1 July 2015.

Click the following link for the consultation page, which includes the exposure draft, explanatory memorandum, and instructions for submitting comments. Comments are due by 22 April 2016.