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Tax Losses in Private Company

Discussion in 'General Investing Discussion' started by artwalker, 21st Sep, 2009.

  1. artwalker

    artwalker New Member

    Joined:
    19th Sep, 2009
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    Location:
    Sydney, NSW
    I am considering selling my private investment holding company, and need to know whether or not the existing carried forward tax losses are a saleable asset of the company. The company is 20 years old and during that time has held my investments in technology and mining investments in Australia and North America. The losses are a combination of trading and capital, amounting to $400,000. I recently sold the last of my investment share -holdings that were held in the company, and don't contemplate any further use for it. The company has no other assets, has no skeletons in the closet and has had its accounts and tax returns prepared by a highly reputable north shore accounting firm for the last 10 years. Whilst it is still a 'going concern', it has no physical or other assets, only the tax losses. I would welcome any advice on this question.
     
  2. jrc

    jrc Active Member

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    3rd May, 2007
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    Location:
    Western, NSW
    Normally one of two tests needs to be met:

    a. continuity of ownership - if you sell there is no continuity of ownership;

    or

    b.continuity of business - as the business assets have been sold therre is no continuity there either. If the company only held investments query whether there ever was a business

    You would be better to retain and put some income producing activity into the company
     
  3. artwalker

    artwalker New Member

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    19th Sep, 2009
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    Location:
    Sydney, NSW
    Thank you jrc for your response. I am curious, however, as to what you are querying in your penultimate para........"If the company only held investments, query whether there ever was a business." It is a "holding company" that owned shareholding positions in various businesses. What is the query, as there must be thousands of companies like it?
     
  4. jrc

    jrc Active Member

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    3rd May, 2007
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    Location:
    Western, NSW
    I'm just wondering whether a company that only held investments could actually be operating a business that could be transferred.
     
  5. artwalker

    artwalker New Member

    Joined:
    19th Sep, 2009
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    Location:
    Sydney, NSW
    Take your point, but am getting very confused on this question. Your original points (a) and (b) are undoubtedly correct, but two leading accountants have given me conflicting advice. One says it is saleable, providing that (a) and (b) are observed, the other says it's not possible, that the ATO wouldn't allow it. I have one sone who has been both a minority shareholder and at one time a director, perhaps he might be the only person who could conceivably carry the business on and avail himself of the losses, consistent with (a) and (b)?