Section DB 24 — Income Tax Act 2007: Share losses

DB 24 Share losses When this section applies (1) This section applies when— (a) a company ( company A ) acquires a share in another company ( company B ); and (b) the share declines in value; and (c) because of the decline in value, company A incurs a loss (the share loss ), whether on a disposal of the share or a valuation of it under subpart ED (Valuation of excepted financial arrangements) or in any other way; and (d) company B— (i) itself uses the amount subscribed for the share; or (ii) uses it to fund directly or indirectly another company ( company C ); and (e) company B or company C has a tax loss, in the calculation of which the amount used is taken into account; and (f) company A, or a company that is part of the same group of companies as company A at any time in the income year in which company B or company C has the tax loss, offsets an amount for the tax loss under section IC 1 (Company A making tax loss available to company B); and (g) the offset is in a tax year before the tax year that corresponds to the income year in which company A incurs the share loss. No deduction (with exception) (2) Company A is denied a deduction for the share loss, except to the extent to which the share loss, as adjusted under subsection (3), is more than the amount offset under section IC 1 , as adjusted under subsection (4). Other denied deductions added (3) When subsection (2) applies, the share loss is adjusted by adding every loss to which all the following apply: (a) company A incurs it as a result of the share’s decline in value or the decline in value of another share if the use of the amount subscribed for the other share is taken into account in calculating the tax loss; and (b) company A incurs it in an income year before the income year referred to in subsection (1)(g); and (c) company A has been denied a deduction for it by the operation of subsection (2). Other offsets added (4) The amount offset under section IC 1 includes every amount that company A, or a company that is part of the same group of companies as company A at any time in the income year in which company A has the tax loss, has offset for the tax loss under that section in a tax year before the tax year that corresponds to the income year in which the share loss is incurred. Link with subpart DA (5) This section overrides the general permission. Defined in this Act: amount , company , deduction , general permission , group of companies , income year , loss , share , tax loss , tax year , Compare: 2004 No 35 s DB 18