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Consolidated Losses Utilisation Worksheet (clu)

This is a Tax worksheet and is not lodged with the return.

Accessing the loss Utilisation worksheet

To access the loss utilisation worksheet:

  1. Click PreparationSchedule > (clw) Consolidated Losses worksheet

  2. Click Utilisation

Fields displayed on the worksheet are:

  • Part A – 1 Current Year Net Income amounts are derived from supporting Foreign Income worksheet.
  • Part A – 2 Current Year Net Capital Gains amounts are derived from the supporting Depreciation Worksheet.
  • Part A – 3 Current Year Net Film Income amounts are entered directly into the worksheet.
  • Part A – 4 Current Year Other Net Income amounts are entered directly into the worksheet.
  • Part B - 1 Prior Year and Transferred Losses Held are derived from the Consolidation Losses worksheet (clw)
  • Part C - 1 to 4 Correspond to Part A and displays the results of applying the losses in Part B to the income amounts in Part A.
Applying Losses for a Full Year

In order to be eligible to be applied against the group's income each loss must continue to pass the relevant business or transfer tests that apply to it.

Where the loss is being applied for the full income year, the order in which the different types of losses are treated are:

  • Group Losses – where the loss is earned within the Group after consolidation.

  • Concessional Losses - where the loss is transferred to the Head Company upon formation using the Concessional method during the transitional period of consolidation.

  • Other Transferred losses - that is, all other losses transferred into the group, within the limits determined by the method used to offset the loss.

Applying Losses for Part of a Year

Where a loss bundle is transferred part way through the year, there are two methods by which the losses may be apportioned. These methods are:

  • A pro-rata basis – where the 'full-year' utilisation rate is used to apportion each amount by the relevant number of days that the available fraction was used.
  • A weighted-average basis – where the utilisation rate is determined for each bundle independently. This rate reflects the number of days in the income year where each fraction was relevant.

As these two part year methods essentially arrive at the same result Tax uses the weighted average method.

Carrying Losses Forward

Prior to Taxation Laws Amendment Bill No 5 2003, all taxpayers were required to deduct a prior year tax loss in the income year that it became available; any unused franking tax offsets after calculating taxable income were lost. Under Taxation Laws Amendment Bill No 5 2003 corporate tax entities may choose the amount of prior year losses to be deducted in the current income year (subject to certain conditions) and may convert an amount of unused franking tax offsets to an equivalent amount of tax loss to be carried forward to subsequent income years.

Whilst methods employed attempt to ensure that the head company cannot utilise more of the loss than they would have otherwise been able to if they had not consolidated, the flexibility offered by the option to carry forward losses attempts to ensure that corporate tax entities are not required to waste losses against franked (tax-free) current year income.

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