Income tax, CGT and entities

Tax losses

A tax loss arises when an entity's allowable deductions for the year are more than its assessable income. A company or trust generally carries the loss forward to use against future income, if it passes the tests that apply, such as the continuity of ownership test or the business continuity test for companies, and the rules for trusts. Individuals face further limits, including the non-commercial loss rules. Losses are not refunded as a rule, so records must keep the loss amount, the year it arose and the tests passed through to the year it is used. A practice should carry the loss balance in the client file and review the tests every year it is claimed.

General information, not tax advice. The rules change, so check the source page above for the current position. Fedix is developed by Tax7 R&D Pty Ltd.