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12 Sep 2005
Appeal Status

Group loss offset rules unavailable to Loss Attributing Qualifying Company (LAQC)

2005 case note – TRA found that Loss Attributing Qualifying Company must attribute all losses to its shareholders - Group Loss Offset rules, LAQC losses.

TRA No 006/04, Decision No 015/2005


The TRA decided that an LAQC must attribute all losses to its shareholders. It cannot allocate part of its losses to another company in the group under the loss offset rules.


The Taxpayer was an LAQC. It incurred a tax loss of $1,200,526.09 for the year ended 31 March 2002.

The Taxpayer elected to offset $44,426 of the loss for the 2002 year to companies within the same group of companies pursuant to section IG 2. The remaining $1,156,199.09 was attributed to its shareholders in terms of section HG 16.

The Commissioner contended the loss offset rules applicable to LAQC's override the general provision applying to offset of losses between members of a group of companies. The result was that he required all losses be attributed under the LAQC rules.


The TRA found that the maxim generalia specialibus non derogant does not apply to this case. In other words, the group loss offset provisions are not so repugnant to, or inconsistent with the LAQC provisions that the two are incapable of standing together.

The TRA observed that section HG 16(1)(a) and (b) plainly enact that all losses incurred by a LAQC in any qualifying year are deemed to be incurred by the shareholders and are unavailable for any other purpose.

The TRA noted that the effect of section HG 16(1)(c) is to ensure that certain losses which cannot be brought within the LAQC regime remain available to be offset against future profits, or against the profits of other companies within the group. An example is losses which cannot be attributed because they occurred when the company did not satisfy section HG 14. Otherwise LAQC losses must be attributed.

Income Tax Act 1994