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IC 4: Common ownership: wholly-owned groups of companies
or “Companies that are fully owned by the same group of people”
You could also call this:

“Requirements for one company to use another company's tax loss”

When one company (Company A) wants to let another company (Company B) use its tax loss, they need to follow some rules:

You need to make sure both companies have enough shared ownership for a certain time. This is explained in other parts of the law.

Company A needs to meet some special requirements set out in another part of the law.

Company A needs to keep the same ownership or business activities as explained in other sections of the law.

The amount of tax loss that can be shared has some limits, which are explained in another part of the law.

You need to tell the government about this and make any payments at the right time, as explained in another section.

If all these rules are followed, Company A can choose to let Company B use its tax loss, or Company B can pay Company A for the tax loss, or both can happen.

Company B then needs to take away the amount of the tax loss or the payment from its income when working out its taxes.

Once Company A decides to share its tax loss, it can’t change its mind.

If Company B pays Company A for the tax loss, this payment isn’t counted as a dividend.

There are some special rules for working out tax losses for part of a year, and for tax losses from a long time ago (before 1992).

There’s also a special rule for tax losses that happened after 1991 but before March 15, 2017.

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Next up: IC 6: Common ownership for period

or “Companies must share ownership for a set time to use each other's tax losses”
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Part I Treatment of tax losses
Grouping tax losses

IC 5Company B using company A’s tax loss

  1. Company A may make a tax loss available to company B to subtract from its net income under section IA 3(2) (Using tax losses in tax year) only if—

  2. company A and company B have minimum common ownership for the relevant period as set out in sections IC 2(2) and IC 6; and
    1. company A meets the requirements of section IC 7; and
      1. company A has the required continuity of ownership or business activities under section IC 2(1) and, if it applies, section IC 10(2)(a); and
        1. the amount falls within the limits set by section IC 8(1) and (2); and
          1. the payment and notification requirements of section IC 9 are met.

            1. Having met all the requirements set out in subsection (1), company A may—

            2. choose to make a tax loss that it has in a tax year available to company B to use in the tax year, notifying the Commissioner as described in section IC 9; or
              1. agree with company B that company B should bear the amount of company A’s tax loss, or take a share in it, in return for a payment by company B to company A by the date set out in section IC 9; or
                1. apply both paragraphs (a) and (b) in relation to the tax loss.

                  1. Company B must subtract the amount of the tax loss referred to in subsection (2)(a) or the payment referred to in subsection (2)(b), as applicable, from its net income for the tax year in relation to which company A makes the amount available or receives the payment.

                  2. If company A chooses to make the amount available to company B under subsection (2)(a), the decision is irrevocable.

                  3. To the extent to which an amount of tax loss is subtracted from net income, a payment from company B to company A under subsection (2)(b) is not a dividend.

                  4. Sections IP 4 and IP 5 (which relate to losses in part-years) modify this section for part-year calculations.

                  5. Section IZ 7 (Grouping tax losses for tax years before 1981–82 and between 1981–82 and 1991–92) modifies the requirements of—

                  6. subsection (1)(a) for a tax loss component that arises in tax years between 1981–82 and 1991–92; and
                    1. subsection (1)(b) for a tax loss component that arises in tax years before the 1991–92 tax year; and
                      1. subsection (1)(a) for a tax loss component that arises in tax years before the 1981–82 tax year.

                        1. Section IZ 7B (Grouping tax losses for commonality periods starting before 15 March 2017 for tax years after 1990–91) modifies the requirements of subsection (1)(b) for a commonality period starting before 15 March 2017 for a tax loss component that arises after the 1990–91 tax year.

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                        Notes
                        • Section IC 5(1)(b): amended (with effect on 15 March 2017), on , by section 85(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                        • Section IC 5(1)(c): amended (with effect on 1 April 2020), on , by section 101(1) (and see section 101(2) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
                        • Section IC 5(8) heading: inserted (with effect on 15 March 2017), on , by section 85(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                        • Section IC 5(8): inserted (with effect on 15 March 2017), on , by section 85(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                        • Section IC 5 list of defined terms commonality period: inserted (with effect on 15 March 2017), on , by section 85(3) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).