fre - chinese shell play ?, page-18

Standup,

I agree that the business would have substantially changed, for that is THE reason for a shell.

However, realise that the tax losses rules use an "or" test, i.e. if one condition is satisfied, it doesn't matter if the other criterion is met or not.

In the case of shells such as FRE, the ATO states:

To utilise a tax loss a company must either:
* satisfy both the continuity of ownership test (COT) and the control test, or
* satisfy the same business test (SBT).

Note the bolded text. It's either and or. It's not too difficult to satisfy the control test and ownership test. Generally speaking, and notwithstanding peculiar instances, you need to retain 50% continuity of the ownership from when the losses have occurred. This isn't difficult. Lawyers and accountants have ways of making sure that the rules are met. How would I know? I've worked on these projects before.