Section IQ 4 — Income Tax Act 2007: Group companies using attributed CFC net losses

IQ 4 Group companies using attributed CFC net losses What this section does (1) This section supplements the general rules relating to the grouping of net losses when, for a tax year (the current tax year ), a company ( company A ) that is part of a group of companies has an amount— (a) of attributed CFC net loss for the current tax year or carried forward from an earlier tax year, or FIF net loss for the current tax year or carried forward from an earlier tax year; and (b) remaining after section IQ 2 is applied for the current tax year and before any amount is made available to another company under this section. Modifications to general rules for grouping net losses (2) For determining whether company A may make available an amount of attributed CFC net loss or FIF net loss to another company ( company B ) in the group of companies, the general rules relating to the grouping of net losses are modified as follows: (a) the group of companies must be a wholly-owned group of companies; and (b) subpart IC (Grouping tax losses) and section GB 4 (Arrangements for grouping tax losses: companies) apply as if an amount of attributed CFC net loss or FIF net loss were a tax loss component; and (c) subsection (3) overrides sections IC 5(1)(d) and IC 8 (which impose limits on the amount of transferred tax loss): (d) section IA 3(2) (Using tax losses in tax year) and subpart IP (Meeting requirements for part-years) do not apply. Ring-fencing cap rule modified (3) The amount of attributed CFC net loss or FIF net loss that company A may make available to company B in the tax year is limited by the following: (a) the total amount made available by company A to group companies must not exceed the amount referred to in subsection (1); and (b) the resulting reduction in company B's net income in the tax year must not exceed the total amount that company B derives in the tax year of attributed CFC income from CFCs, or FIF income calculated under the attributable FIF income method from FIFs, resident in the country or territory (the jurisdiction ) in which the loss arose, reduced by the total of the following: (i) the total amount of the attributed CFC income or FIF income taken into account in calculating a deduction of company B under section DN 4 or DN 8 (which relate to ring-fencing caps on deductions): (ii) the total amount of attributed CFC net loss or FIF net loss that company B derives in the tax year from CFCs or FIFs resident in the jurisdiction: (iii) the total amount of attributed CFC net loss or FIF net loss, from CFCs or FIFs resident in the jurisdiction, that company B carries forward to the tax year and is available tax loss for company B: (iv) the total amount of attributed CFC net loss or FIF net loss, from CFCs or FIFs resident in the jurisdiction, that is made available to company B for the tax year under this section by a company other than company A. Defined in this Act: amount , attributed CFC income , attributed CFC net loss , available tax loss , branch equivalent method , CFC , company , deduction , FIF , FIF income , FIF net loss , group of companies , net income , net loss , tax loss component , tax year , wholly-owned group of companies Compare: 2004 No 35 s IG 4 Section IQ 4(1): substituted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 97(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63). Section IQ 4(2) heading: substituted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), pursuant to section 97(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63). Section IQ 4(2): substituted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 97(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63). Section IQ 4(3): substituted (with effect on 1 April 2008), on 29 August 2011 (applying for the 2008–09 and later income years), by section 97(3) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63). Section IQ 4(3)(b): amended (with effect on 1 July 2011), on 29 August 2011 (applying for income years beginning on or after 1 July 2011), by section 97(4) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63). Section IQ 4(3)(b)(iii): amended (with effect on 30 June 2009), on 29 August 2011 (applying for income years beginning on or after 1 July 2009), by section 97(5) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63). Section IQ 4 list of defined terms available tax loss : inserted (with effect on 30 June 2009), on 29 August 2011, by section 97(7) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63). Section IQ 4 list of defined terms FIF net loss : inserted (with effect on 1 April 2008), on 29 August 2011, by section 97(6) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63). Section IQ 4 list of defined terms tax loss : repealed (with effect on 1 April 2008), on 7 December 2009, by section 126 of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).