There are certain tests that must be satisfied for the entity to be able to apply a loss or to carry forward a loss to a later income year. The entity must keep a record of its losses and account for any adjustments, including those made by the ATO.
Records must be retained for at least five years from when they are prepared or from the completion of transactions to which they relate, whichever is later. To support claims for losses, records also should be retained at least until the end of the period of review for the income year in which the relevant losses are fully applied.
If required, the entity must be able to demonstrate not only the balance of any losses being either claimed or carried forward but also how those losses arose.
1 Tax losses carried forward to later income years
Complete B to G and U where appropriate; otherwise leave blank.
Do not include net capital losses or film losses at item 1.
Write net capital losses carried forward to later income years at item 2. Details of film losses carried forward are not required to be reported on this schedule.
For the definition of a tax loss, see section 995-1 of the ITAA 1997.
Subject to various rules, an earlier year tax loss is deducted in a later income year in the order in which it was incurred (to the extent that it has not already been utilised).
For more information about deducting and carried forward losses, see Losses.
An earlier year tax loss may be reduced by the commercial debt forgiveness provisions of Division 245 of the ITAA 1997.
Pooled development fund (PDF) tax losses are excluded from B to G and U. For more information on deductibility of PDF tax losses, see Division 195 of the ITAA 1997.
Net capital losses may only be applied in accordance with Division 102 of the ITAA 1997. A CGT schedule may need to be completed. For more information, see the Guide to capital gains tax 2018 (NAT 4151).
Year of loss
At the appropriate year, write the unutilised amount of the tax loss incurred by the entity in that year and carried forward to later income years under section 36-15 or section 36-17 (as applicable) of the ITAA 1997.
For 2010–11 and earlier income years, write the total amount for those years.
If no tax loss was incurred in a particular year, or if the tax loss incurred in that year has been applied in full, leave blank.
U Total
Write at U the total of tax losses carried forward to later income years; this amount is the total of the amounts at B to G.
Transfer the amount at U to the Tax losses carried forward to later income years label on your tax return.
For more information on how this amount is calculated, see Tax losses carried forward to later income years under 13 Losses information in the relevant instructions.
Examples for part A items 1 and 2
The examples are intended to be a guide only and represent some of the many possible methods of calculating the amount of losses available to be applied or carried forward to later income years.
The examples apply equally to companies, trusts and funds, with the exception that trusts and funds are not able to transfer losses to other entities, nor are they able to have losses transferred to them. The transfer of losses provisions are limited to transfers involving an Australian branch of a foreign bank; see section 170-30 of the ITAA 1997.
In all examples, it is assumed that the entity passes all tests, at all times, for that entity to be eligible to apply these losses.
Example 1
A company's trading results for 2010–11 to 2017–18 and movement in the balances of its tax losses are as follows:Year |
Tax loss incurred |
Net exempt income |
Tax loss deducted |
Balance of tax loss |
|---|---|---|---|---|
2010–11 |
10,000 |
4,000 |
|
6,000 |
2011–12 |
30,000 |
|
|
36,000 |
2012–13 |
20,000 |
|
|
56,000 |
2013–14 |
|
1,000 |
2,000 |
53,000 |
2014–15 |
|
500 |
|
52,500 |
2015–16 |
6,000 |
|
|
58,500 |
2016–17 |
1,000 |
600 |
|
58,900 |
2017–18 |
|
|
5,000 |
53,900 |
Balance of losses |
2010–11 |
2011–12 |
2012–13 |
2013–14 |
2014–15 |
2015–16 |
2016–17 |
2017–18 |
|---|---|---|---|---|---|---|---|---|
2012–13 and earlier income years |
6,000 |
36,000 |
56,000 |
53,000 |
52,500 |
52,500 |
52,500 |
47,500 |
2013–14 |
|
|
|
|
|
|
|
|
2014–15 |
|
|
|
|
|
|
|
|
2015–16 |
|
|
|
|
|
6,000 |
6,000 |
6,000 |
2016–17 |
|
|
|
|
|
|
400 |
400 |
2017–18 |
|
|
|
|
|
|
|
|
Total |
6,000 |
36,000 |
56,000 |
53,000 |
52,500 |
58,500 |
58,900 |
53,900 |
Complete part A item 1 as follows:
Label |
Year of loss |
Amount ($) |
|---|---|---|
B |
2017–18 |
|
C |
2016–17 |
400 |
D |
2015–16 |
6,000 |
E |
2014–15 |
|
F |
2013–14 |
|
G |
2012–13 and earlier income years |
47,500 |
U |
Total |
53,900 |
Transfer the amount at U ($53,900) to U item 13 Tax losses carried forward to later income years on your Company tax return 2018.
End of example2 Net capital losses carried forward to later income years
Complete H to M and V where appropriate; otherwise, leave blank.
You must complete the details requested at this item if the entity has net capital losses carried forward to later income years.
The net capital losses of a company shown at H to M include any unapplied current year net capital loss calculated in accordance with Subdivision 165-CB of the ITAA 1997.
The entity may be required to complete a CGT schedule; see the Guide to capital gains tax 2018.
Year of loss
At the appropriate year, write the amount of any unapplied net capital loss made by the entity in that year that can be carried forward and applied to reduce capital gains in later income years.
For 2010–11 and earlier income years, write the total amount for those years.
If there is no net capital loss for a particular year, or the net capital loss made in that year has been applied in full, leave blank.
U Total
Write at V the total of unapplied net capital losses carried forward to later income years at H to M.
Transfer the amount at V to Net capital losses carried forward to later income years on your tax return.
Example 2
A company's results for 2012–13 to 2017–18 and movement in the balances of its net capital losses are as follows:Year |
Net capital loss incurred |
Net capital loss applied |
Balance of net capital losses |
|---|---|---|---|
2012–13 |
1,000 |
|
1,000 |
2013–14 |
9,000 |
|
10,000 |
2014–15 |
|
2,000 |
8,000 |
2015–16 |
8,000 |
|
16,000 |
2016–17 |
|
1,500 |
14,500 |
2017–18 |
1,000 |
|
15,500 |
Year |
2012–13 |
2013–14 |
2014–15 |
2015–16 |
2016–17 |
2017–18 |
|---|---|---|---|---|---|---|
2012–13 |
1,000 |
1,000 |
|
|
|
|
2013–14 |
|
9,000 |
8,000 |
8,000 |
6,500 |
6,500 |
2014–15 |
|
|
|
|
|
|
2015–16 |
|
|
|
8,000 |
8,000 |
8,000 |
2016–17 |
|
|
|
|
|
|
2017–18 |
|
|
|
|
|
1,000 |
Total |
1,000 |
10,000 |
8,000 |
16,000 |
14,500 |
15,500 |
Complete part A item 2 as follows:
Label |
Year of loss |
Amount ($) |
|---|---|---|
H |
2017–18 |
1,000 |
I |
2016–17 |
|
J |
2015–16 |
8,000 |
K |
2014–15 |
|
L |
2013–14 |
6,500 |
M |
2012–13 and earlier income years |
|
V |
Total |
15,500 |
Transfer the amount at V ($15,500) to V item 13 Net capital losses carried forward to later income years on your Company tax return 2018.
End of example