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    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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    Part F: Tax Losses Reconciliation Statement

    This part requires you to reconcile the entity's tax losses brought forward from the prior income year with those carried forward to later income years.

    Note: Do not include net capital losses or film losses at this item.

    Balance of tax losses brought forward from prior year

    Show at A the undeducted and not transferred - amount of tax losses incurred by the entity and brought forward to the 2008–09 income year under section 36-17 of the ITAA 1997.

    Amount of convertible foreign losses

    Show at B any overall foreign losses (excluding capital losses) converted to tax losses in the current year. For more information refer to Part E - Foreign source losses.

    Net forgiven amount of debt

    Tax losses brought forward are reduced by any commercial debt forgiveness amounts (Division 245 of Schedule 2C to the ITAA 1936). If a commercial debt owed by the entity is forgiven during the income year, apply the net amount of debts forgiven to reduce the entity's deductible revenue losses, net capital losses, certain undeducted revenue or capital expenditure and the cost base of CGT assets, in that order.

    Show at C the total net forgiven amount applied to reduce tax losses (if any) incurred in years of income before the forgiveness year of income.

    Tax loss incurred (if any) during current income year

    Show at D the entity's tax loss for the year disregarding net exempt income and excess franking offsets.

    Note: There is a limit on the total of the amount you can deduct for the income year for gifts and contributions (section 26-55 of the ITAA 1997). A tax loss cannot be produced or increased by the deduction allowable under Division 30 of the ITAA 1997, which is about deductions for gifts or contributions.

    Tax loss amount from conversion of excess franking offsets

    If the entity has excess franking offsets, it must convert the excess franking offsets into an amount of tax loss to carry forward to later income years. You convert the amount of excess franking offsets into a tax loss by dividing the excess franking offsets amount by the corporate tax rate which gives you the tax loss amount. You record the amount of this tax loss at E.

    Net exempt income

    Include at F the amount of net exempt income to be taken into account in calculating the entity's tax loss or carried forward tax loss.

    You must first deduct a prior year tax loss from any net exempt income in 2008–09.

    If the entity has:

    • net exempt income, and
    • assessable income which exceeds allowable deductions (other than the tax loss)


    • the tax loss must first be applied against net exempt income, and
    • the entity can then deduct the amount of the tax loss (if any remains) that it chooses, subject to certain limitations (subsection 36-17(3) and (5) of the ITAA 1997).

    Conversely, if the entity has:

    • net exempt income, and
    • allowable deductions (other than the tax loss) which exceed its assessable income


    • that excess must first be applied against net exempt income, and
    • the tax loss must then be applied against any net exempt income that remains (subsection 36-17(4) of the ITAA 1997).

    Tax losses forgone

    Show at G the amount of tax losses that have been forgone by the entity, i.e. tax losses that will not be deducted in any later income year.

    Note: An entity cannot deduct a tax loss unless:

    1. it has the same owners and the same control throughout the period from the start of the loss year to the end of the income year; or
    2. it satisfies the same business test by carrying on the same business, entering into no new kinds of transactions and conducting no new kinds of business. See Subdivision 165-AExternal Link of the ITAA 1997.

    Tax losses deducted

    Show at H tax losses (including convertible foreign losses) deducted during the income year under section 36-17 of the ITAA 1997.

    Tax losses transferred out under Subdivision 170-A

    Show at I the amount of tax losses transferred out by the company to group companies under Subdivision 170-A of the ITAA 1997.

    Total tax losses carried forward to later income years

    Show at J the total of tax losses carried forward to later income years.

    Last modified: 27 Nov 2009QC 21731