13. Losses information

U - Tax losses carried forward to later income years

Write at U the unapplied (undeducted or not transferred) amount of tax losses incurred by the company and carried forward to a later income year under section 36-17 of the ITAA 1997.

If the company is a designated infrastructure project (DIP) entity, ensure the amount of tax losses carried forward to later income years include any uplift amount.

Net exempt income (if any) must be taken into account in calculating the amount of tax losses carried forward to a later income year, see sections 36-10 and 36-17 of the ITAA 1997.

Tax losses carried forward may be affected by the commercial debt forgiveness provisions, see appendix 1.

Under sections 36-17 and 36-55 of the ITAA 1997, a company is:

• subject to certain limitations, able to choose the amount of prior year tax losses it wishes to deduct in a later year of income from the excess (if any) of its assessable income over total deductions (other than tax losses). Providing choice means that companies can choose not to deduct prior year losses in order to pay sufficient tax to be able to frank their distributions
• able, in certain circumstances, to convert excess franking offsets into a tax loss for the income year and carry forward the tax loss for consideration as a deduction in a later income year.

If the company has excess franking offsets at H Excess franking offsets item 8, calculate the company’s tax loss for the income year under the method statement in subsection 36-55(2) of the ITAA 1997 as follows:

Step 1: Work out the amount (if any) that would have been the company’s tax loss for the year under section 36-10, 165-70, 175-35 or 701-30 of the ITAA 1997, disregarding any net exempt income.

Step 2: Divide the amount of excess franking offsets by the corporate tax rate.

Step 3: Add the result of steps 1 and 2.

Step 4: Take away the company’s net exempt income (if any).

The result (if a positive amount) is the company’s tax loss for the income year. Include this amount at U with any unapplied tax losses from prior income years.

If a company is required to complete a Losses schedule 2016, the amount of the tax losses shown at U Total at item 1 Tax losses carried forward to later income years in part A of that schedule must be the same as the amount shown at U on the Company tax return 2016.

Do not include any net capital losses to be carried forward to later income years at U. Write these separately at V Net capital losses carried forward to later income years item 13 on the Company tax return 2016 and in the CGT schedule, if a CGT schedule is required.

V - Net capital losses carried forward to later income years

Write at V the total of any unapplied net capital losses from collectables and unapplied net capital losses from all other CGT assets and events. This information is calculated or transferred from:

• 3B in table 5 and 3A in table 9 of the CGT summary worksheet, or
• A and B in part 3 of the CGT schedule, if a CGT schedule is required.

See also:

• Guide to capital gains tax 2016.

If the company is required to complete a Losses schedule 2016, the amount of the net capital losses shown at V Total at item 2 Net capital losses carried forward to later income years in part A of that schedule must also be the same as the amount shown at V on the company tax return.