111Y. Qualifying loss election

(1) (a) Section 111X shall not apply where a filing constituent entity makes a qualifying loss election for a jurisdiction.

(b) Where a qualifying loss election is made for a jurisdiction, a qualifying loss deferred tax asset shall be determined for the jurisdiction for each fiscal year in which there is a net qualifying loss in that jurisdiction.

(c) For the purposes of paragraph (b), the qualifying loss deferred tax asset for a jurisdiction in respect of a fiscal year shall be calculated as—

NQL × MTR

where—

(d) A qualifying loss election shall not be made for a jurisdiction with an eligible distribution tax system within the meaning of section 111AS.

(2) An amount of qualifying loss deferred tax asset for a jurisdiction in respect of a fiscal year determined pursuant to subsection (1) shall be used in any subsequent fiscal year in which there is a net qualifying income for the jurisdiction calculated as the lesser of—

(a)   NQI × MTR

where—

or

(b) the amount of the qualifying loss deferred tax asset that is available.

(3) The qualifying loss deferred tax asset for a jurisdiction, determined in accordance with subsection (1), shall be reduced by the amount that is used for a fiscal year and the balance remaining shall be carried forward to subsequent fiscal years.

(4) Where a qualifying loss election is withdrawn—

(a) any remaining qualifying loss deferred tax asset for a jurisdiction determined in accordance with subsection (1) shall be reduced to zero as of the first day of the first fiscal year in which the qualifying loss election is no longer applicable, and

(b) the deferred tax assets and deferred tax liabilities for the jurisdiction, if any, shall be taken into account as if they had been calculated in accordance with section 111X and 111AW for the prior fiscal year.

(5) (a) Subject to paragraph (b), the qualifying loss election shall be made in the top-up tax information return delivered, in accordance with section 111AAI, for the first fiscal year in which the MNE group or large-scale domestic group has a constituent entity located in the jurisdiction for which the election is made.

(b) Where an election has been made in respect of a jurisdiction by the MNE group or large-scale domestic group in accordance with section 111AJ(2), the qualifying loss election for that jurisdiction shall be made in the first top-up tax information return delivered, in accordance with section 111AAI, in respect of the MNE group or large-scale domestic group after the election made in accordance with section 111AJ(2) ceases to apply.

(6) Where a flow-through entity that is the ultimate parent entity of an MNE group or large-scale domestic group makes a qualifying loss election under this section, the qualifying loss deferred tax asset shall be calculated by reference to the qualifying loss of the flow-through entity after reduction pursuant to section 111AQ(3).