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Ruling

Subject: Company losses

Question 1

Can the tax losses of Subco incurred in each of the following years be transferred to the head company of the consolidated group:

(a) The income year ended 30 June 2004?

(b) The income year ended 30 June 2005?

(c) The income year ended 30 June 2006?

(d) The income year ended 30 June 2007?

(e) The income year ended 30 June 2008?

Answer

(a) The income year ended 30 June 2004- Yes

(b) The income year ended 30 June 2005- Yes

(c) The income year ended 30 June 2006- Yes

(d) The income year ended 30 June 2007- Yes

(e) The income year ended 30 June 2008- Yes

Question 2

Does Headco satisfy the same business test (SBT) allowing for tax losses incurred by the group in each of the following loss years to be recouped in the income year ended 30 June 2014:

(a) The income year ended 30 June 2009?

(b) The income year ended 30 June 2010?

(c) The income year ended 30 June 2011?

(d) The income year ended 30 June 2012?

(e) The income year ended 30 June 2013?

Answer

(a) The income year ended 30 June 2009- Yes

(b) The income year ended 30 June 2010- Yes

(c) The income year ended 30 June 2011- Yes

(d) The income year ended 30 June 2012- Yes

(e) The income year ended 30 June 2013- Yes

Question 3

If the tax losses of Subco (Transferred in tax losses) can be transferred to the head company of the tax consolidated group, does the tax consolidated group satisfy the SBT in respect of these losses allowing for the Transferred in tax losses to be recouped in the income year ended 30 June 2014?

Answer

Yes

This ruling applies for the following period

1 July 2013 to 30 June 2014

The scheme commences on

1 July 200X

Relevant facts and circumstances

1. Subco is a manufacturer and wholesale supplier of products.

2. As at 30 June 200X, Subco had manufacturing operations in two Australian states/territories.

3. In 200Y, Subco merged two of its state based operations into one larger site. This move was initiated to continue to facilitate the business' growth. To facilitate this move and the anticipated growth, Subco changed its financing arrangements.

4. In 200Z, an additional director was appointed to Subco's board.

5. Subco incurred tax losses in the income years ended 30 June 200X to 30 June 200Z.

6. In 200Z, Headco was incorporated and acquired 100% of the share capital in Subco. Headco also acquired another entity (Subco2) that was a manufacturer and wholesale supplier of the same type of products. Headco then formed a tax consolidated group with Subco and Subco2.

7. Since its establishment in 200Z, the Headco consolidated group has continued to be a manufacturer and wholesale supplier of products.

8. In 200Z, Headco also acquired a proportion of the issued capital in another company, Relatedco. Relatedco is also a wholesale supplier of the same products.

9. Since commencing operations in 200Z, the business operated by the Headco consolidated group has undergone the following changes:

• In 200Z, Subco acquired the assets of another business in its field. This acquisition did not introduce any new service offerings, brands or products.

• In 200V, Subco2 purchased the business assets (including fixed assets, inventory, intellectual property, employees and lease agreements) of another manufacturing business. This acquisition did not introduce any new service offerings or products to the existing business. This acquisition did allow however the Headco group to produce in-house some products that were previously outsourced. This acquisition also increased the number of Headco's employees.

• In 20XX, Subco closed its one of its factories. This closure did not result in the cessation of any service offerings or products. Some goodwill was written off as a result of the closure of this factory. Some assets from this factory were leased to Relatedco.

• In 20XX, Subco2 closed one of its factories. Some assets were sold for scrap value and the remainder of assets were transferred to another factory of Subco2 located in the same region. As part of this closure, some products that had been manufactured in-house were outsourced. Some goodwill was written off as a result of the closure of this factory.

• In 20YY, the Headco group commenced offering its products with optional 'add-ons'. Previously these items were required to be sourced separately by customers. These additional items are not manufactured by the Headco group, but rather sourced from its suppliers on a 'Just In Time' basis. In 20YY and 20ZZ, the additional revenue contributed by these 'add-ons' represented less than 0.5% of the group's total revenue.

• In 20YY, the Headco group began to undertake a product process in-house that was previously outsourced. This did not result in a different product, but rather was a change in the process of supplying already existing products to improve operating efficiencies and increase profits. This process change reduced delivery times to customers and added revenue in the first year which represented 0.X% of group's total revenue.

10. For the income years ended 30 June 200Y to 30 June 20ZZ, the relative proportion of Headco's gross revenue that was attributable to products manufactured in-house was greater than 90% compared to sales of outsourced products which were less than 10%.

11. For the income years ended 30 June 200Y to 30 June 20ZZ, the relative proportion of Headco's gross revenue that was attributable to Headco's key product types remained consistent.

12. From 30 June 200Y to 30 June 20XX, Headco sold approximately 25% of its products to commercial customers and 75% residential customers.

13. From 30 June 20VV to 30 June 20YY, Headco sold approximately 20% of its products to commercial customers and 80% residential customers.

14. Five of Subco's 'top 20' customers in 200x remained 'top 20' customers in 20ZZ

15. Three additional 'top 20' customers in 20ZZ were also smaller customers in 200X that have grown to be 'top 20' customers.

16. Six of Subco's 'top 20' customers in 200X remained 'top 20' customers in 20XX.

17. Four additional 'top 20' customers in 20XX were also smaller customers in 200X that have grown to be 'top 20' customers.

18. Headco incurred tax losses in the income years ended 30 June 200Y to 30 June 20YY.

19. During the income year ended 30 June 20ZZ, Headco intends to utilise some of its carried forward prior year tax losses.

20. It is not practicable to determine whether the continuity of ownership test (COT) has been satisfied after Headco's incorporation in 200X due to difficulties in undertaking a full COT analysis.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 165-12

Income Tax Assessment Act 1997 section 165-13

Income Tax Assessment Act 1997 section 165-210

Income Tax Assessment Act 1997 Subdivision 707-A

Reasons for decision

Question1:

Can the tax losses of Subco incurred in each of the following years be transferred to the head company of the consolidated group:

(a) The income year ended 30 June 2004?

(b) The income year ended 30 June 2005?

(c) The income year ended 30 June 2006?

(d) The income year ended 30 June 2007?

(e) The income year ended 30 June 2008?

Summary

21. The tax losses incurred by Subco for the income years ended 30 June 200V to 30 June 200X can be transferred to the head company of the consolidated group.

Detailed Reasoning

22. When an entity becomes a member of a consolidated group, its unused carry-forward tax losses are transferred to the head company if the tax losses satisfy modified versions of the usual tests for deducting and applying them i.e. the COT in section 165-12 of the Income Tax Assessment Act 1997 (ITAA 1997) or the SBT in section 165-13 of the ITAA 1997.

23. Broadly, the tests are applied as though the 12 months prior to the joining time were the loss claim year (known as the trial year). The tax loss is transferred to the head company of the group if the joining entity could have utilised the tax loss in the trial year assuming it had sufficient income or gains of the relevant type.

24. Subdivision 707-A of the ITAA 1997 provides the rules for the 'transfer' of unutilised tax losses of a joining entity to a head company of a consolidated group. These rules apply to tax losses incurred after 30 June 1999. This Subdivision is applied to each tax loss that the joining entity seeks to transfer, separately, and not the total amount of all the tax losses carried forward at the joining time.

25. Subco incurred tax losses in the income years ended 30 June 200V to 30 June 200X.

26. The modified versions of the COT and the SBT must therefore be considered for each tax loss to determine whether these unutilised tax losses can be transferred to the head company of the consolidated group.

COT

27. The modified COT requires the joining entity to have maintained a majority of the same ownership and control for the period between the start of the loss year until just after the joining time (sections 165-12, 165-15 and 707-120 of the ITAA 1997).

28. In the current circumstances, the COT (as modified) was failed when Headco acquired 100% ownership of Subco (just prior to the formation of the tax consolidated group). Therefore, in order to transfer the tax losses incurred by Subco to the head company of the tax consolidated group, the modified SBT must be satisfied.

SBT

29. The SBT is a defined term under section 995-1 of the ITAA 1997, which states that the SBT has the meaning given by Subdivision 165-E of the ITAA 1997.

30. Section 165-210 in Subdivision 165-E of the ITAA 1997 contains the conditions to be satisfied under the SBT. Broadly, the SBT is satisfied if throughout the SBT period:

• it carried on the same business as it carried on immediately before the appropriate test time (subsection 165-210(1) of the ITAA 1997) (same business test);

• it did not carry on any business other than a business of a kind carried on before the test time as part of the overall business (paragraph 165-210(2)(a) of the ITAA 1997) (the new business test);

• it only derived assessable income from transactions of a kind that it entered into in the course of the business operations before the test time (paragraph 165-210(2)(b) of the ITAA 1997) (new transactions test); and

• the provisions in subsection 165-210(3) of the ITAA 1997 do not apply (anti-avoidance test).

SBT period

31. The 'SBT period' is a defined term under section 995-1 of the ITAA 1997, which states that the SBT period has the meaning given by a number of sections.

32. The relevant section in relation to tax loss transfers on consolidation is section 707-125 of the ITAA 1997 which, at subsection 707-125(2) of the ITAA 1997 modifies the application of section 165-13 of the ITAA 1997. Subsection 707-125(2) of the ITAA 1997 states:

Work out whether the loss is transferred on the basis that section 165-13 required the joining entity to satisfy the same business test for:

(a) the same business test-period (test-period) consisting of:

(i) the 'trial' year, and

(ii) the income year that included the test time worked out for section 165-13 for the joining entity (disregarding paragraph (b) of this subsection), if that income year started before the trial year; and

(b) the time (the test time) just before the end of the income year for which the loss was made by the joining entity.

The trial year- subparagraph 707-125(2)(a)(i) of the ITAA 1997

33. The 'trial year' is the notional loss claim year adopted in transfer testing, and represents the equivalent of the recoupment period in the 'recoupment test'. Subsection 707-120(2) of the ITAA 1997 defines the 'trial year' as:

(a) starting at the latest of these times:

(i) the time 12 months before the joining time;

(ii) the time the joining entity came into existence;

(iii) the time the joining entity last ceased to be a subsidiary member of a consolidated group, if the joining entity had been a member of a consolidated group before the joining time but was not a member of the consolidated group just before the joining time; and

(b) ending just after the joining time.

34. For the 'trial year', it is assumed the amount of the tax loss that could be used is not restricted by the actual amount of income available at that time (paragraph 707-120(1)(b) of the ITAA 1997). Additionally, subsection 707-120(3) of the ITAA 1997 provides:

When working out whether the joining entity carried on the same business throughout the trial year (or a period including the trial year) as it carried on at a particular time, assume that the entity carried on at and just after the joining time the same business that it carried on just before the joining time.

35. Effectively, any change in the joining entity's business activities at and just after the joining time is not relevant for 'transfer' testing.

36. In the current circumstances, the trial year under subsection 707-125(2) of the ITAA 1997 runs from 12 months prior to the joining time until just after the joining time.

The subparagraph 707-125(2)(a)(ii) of the ITAA 1997 income year

37. The income year in subparagraph 707-125(2)(a)(ii) of the ITAA 1997, refers to the test time defined in section 165-13 of the ITAA 1997. For an entity that can identify when they last passed COT, subsection 165-13(2) of the ITAA 1997 identifies the test time as 'the income year which includes that time'. This income year will only be relevant to the SBT period if the year started before the 'trial year'.

38. In this instance, the COT was failed in the income year ended 30 June 200Y when Headco acquired 100% of the shares in Subco. Because this income year did not start before the trial year the additional test time flagged in subparagraph 707-125(2)(a)(ii) of the ITAA 1997 will not be relevant.

Paragraph 707-125(2)(b) of the ITAA 1997

39. Paragraph 707-125(2)(b) of the ITAA 1997 includes as a test time the time just before the end of the income year for which the loss was made by the joining entity.

40. In the current circumstances, Subco has incurred tax losses over a number of income years and therefore the relevant test times for the purposes of paragraph 707-125(2)(b) of the ITAA 1997 for each tax loss is as follows:

41. Based on the above, the SBT conditions must therefore be considered at each of the test times and the trial year.

Subsection 165-210(1) of the ITAA 1997 - 'same business test'

42. The SBT is the primary, positive test. It looks at whether the business in the trial year is actually the same business that was carried on at the test time.

43. The Commissioner's view on the operation of sections 165-13 and 165-210 is set out in Taxation Ruling TR 1999/9 Income tax: the operation of sections 165-13 and 165-210, paragraph 165-35(b), section 165-126 and section 165-132.

44. It is initially relevant to note that in this section reference to 'same' has been decided by the courts as meaning 'identical business' rather than of the same kind or similar kind (Avondale Motors (Parts) Pty Ltd v. FC of T (1971) 124 CLR 97; 45 ALJR 280; 2 ATR 312; 71 ATC 4101).

45. Whether Subco carried on the same business is a question of fact. The issue of fact to be determined in applying the SBT is to identify the business carried on by Subco immediately before the test times and determine whether Subco carried on the same business at all times during the trial period.

46. In the current circumstances based on the facts provided, and having regard to the principles expressed in TR 1999/9, it is considered that Subco has carried on the same business throughout the trial year as it carried on immediately before each of the relevant test times. It therefore meets the positive requirement of the SBT as set-out in subsection 165-210(1) of the ITAA 1997 in respect of each tax loss incurred by Subco in the 200V to 200X income years that is to be transferred to the head company of the tax consolidated group.

New business and new transactions test

47. As previously highlighted, in addition to meeting the positive limb of the SBT, subsection 165-210(2) of the ITAA 1997 requires that the company:

(a) has not, at any time during the test-period, derived assessable income from a business of a kind which it did not carry on before the test-time (the new business test); and

(b) has not, at any time during the test-period, derived assessable income from a transaction of a kind that it had not entered into in the course of its business operations before the test-time (the new transaction test).

48. The new business test and the new transactions test allow a business to expand and develop, provided the activities by which it produces its income remain of the same kind. In the 'new business' and the 'new transactions' tests the word 'business' becomes more specific and refers to each of the different kinds or types of activities that form the overall business.

49. The meaning of 'of the same kind' is derived from the business operations before the test time. A business or transaction that is entered into during the test-period, and:

• which is outside the course of business operations carried on before the test-time, or

• which is extraordinary or unnatural when judged by the course of business operations before the test-time, or

• which otherwise could not have been entered into in the course of business operations before the test-time,

is a business or transaction of a different 'kind' from those actually entered into before the test-time.

50. Paragraphs 70 to 72 of TR 1999/9 explain that the 'new business' test is intended to limit the expansion available under the same business test. Generally speaking, the new business test permits a company to expand or develop during the period of recoupment within the same fields of endeavour as it was engaged in before the test-time.

51. In the 'new transactions' test, where a new transaction is considered 'of a different kind' from the transactions at the test time the test will not be satisfied. 'Transaction', in this reference incorporates every means or event by which income is derived. The test looks at all transactions, not merely those that are 'isolated' or 'independent' (TR 1999/9 paragraph 80). Derivation of small, insignificant amounts of income will not cause the company to fail the new business test or the new transactions test.

52. Based on the facts of this case and having regard to the principles expressed in TR 1999/9, it is considered that the satisfaction of the SBT for each of the relevant tax losses would not be precluded by the new business and new transaction tests.

Anti-avoidance provision- subsection 165-210(3) of the ITAA 1997

53. Subsection 165-210(3) of the ITAA 1997 is a provision designed to prevent a taxpayer company from satisfying the SBT tests where the company commenced to carry on new businesses or entered into a new kind of transaction prior to the change-over, in anticipation of obtaining a deduction for a prior year loss, a current year loss or a bad debt respectively.

54. In the current circumstances, based on an objective analysis of the facts and information provided, there is no indication that Subco varied its business activities or transactions to enable it to satisfy the SBT in anticipation of allowing the transfer of the prior year losses. As such subsection 165-210(3) of the ITAA 1997 will not apply to preclude satisfaction of the SBT.

SBT overall conclusion

55. Based on the above analysis, it is considered that the SBT is satisfied in respect of each tax loss incurred by Subco during the income years ended 30 June 200V to 30 June 200X. These tax losses can therefore be transferred to the head company upon formation of the tax consolidated group.

Question 2:

Does Headco satisfy the SBT allowing for tax losses incurred by the group in each of the following loss years to be recouped in the income year ended 30 June 2014:

(a) The income year ended 30 June 2009?

(b) The income year ended 30 June 2010?

(c) The income year ended 30 June 2011?

(d) The income year ended 30 June 2012?

(e) The income year ended 30 June 2013?

56. During the relevant income years, Headco also incurred tax losses as head company of the consolidated group. Before these tax losses can be utilised in a subsequent income year, Headco is also required to satisfy the general loss recoupment provisions.

57. Headco has advised that it is not practicable to determine whether the COT has been failed due to difficulties in undertaking a full COT analysis. As such, it will be necessary for Headco to satisfy the SBT to recoup these tax losses in the 20ZZ income year.

58. As previously detailed, the SBT is a defined term under section 995-1 of the ITAA 1997, which states that the SBT has the meaning given by Subdivision 165-E of the ITAA 1997. In this regard, section 165-210 in Subdivision 165-E of the ITAA 1997 states that the company must satisfy the same business test, new business test, new transactions test and the anti-avoidance test.

The test times

59. For the purposes of applying the above SBT tests, the SBT period is the income year in which the tax loss is sought to be claimed, which in this instance runs from 1 July 20YY to 30 June 20ZZ. Each test must be applied to the business the company carried on immediately before the 'test time'.

Test time for 200Y income year tax losses

60. If a company came into being during the loss year and it is not practicable to determine whether the COT is failed, the relevant test time is the end of the loss year (item 3 of subsection 165-13(2) of the ITAA 1997). Headco was incorporated during the 200Y income year and has advised that it is not practicable to determine when the COT was failed. Consequently, the relevant test time for those tax losses incurred in the period will be the end of the loss year i.e. 30 June 2009.

Test time for 2010 to 2013 income year tax losses

61. For those tax losses incurred in the income years ended 30 June 2010 to 30 June 2013, the test time will be the start of the relevant income year in which the tax loss was incurred (as per item 2 of subsection 165-13(2) of the ITAA 1997). The specific test time for these tax losses will therefore be:

The SBT and the single entity rule

62. Under the single entity rule of subsection 701-1(1) of the ITAA 1997, subsidiary members of a consolidated group are taken for the purposes of the SBT (section 165-210 of the ITAA 1997) (among other purposes), to be parts of the head company. In this context, the principles set out in TR 1999/9 in respect of the application of the SBT to a single company apply equally to the head company of a consolidated group.

63. When determining the one overall business carried on by the head company of a consolidated group, for the purposes of subsection 165-210(1) of the ITAA 1997, it is necessary to have regard to the activities of the subsidiary members of the group. Applying the principles of TR 1999/9, one overall business of the head company is to be identified by examining all of the activities, enterprises or undertakings carried on:

• at the appropriate test time by all those entities that were members of the consolidated group at that time; and

• by all entities during that part of the same business test period when they were members of the consolidated group.

64. Similarly, when applying the new business test and new transactions test to the head company (subsection 165-210(2) of the ITAA 1997), regard must be had to the enterprises, undertakings and transactions that were carried on or entered into before the test time by entities while they were members of the consolidated group. These activities are then compared with the enterprises, undertakings and transactions carried on or entered into by all entities while they are members of the consolidated group during the SBT period. This comparison determines whether the enterprises, undertakings and transactions before the test time and during the same business test period are different in kind.

Subsection 165-210(1) of the ITAA 1997 - 'same business test'

65. The SBT is the primary, positive test. It looks at whether the business in the SBT period (1 July 20YY to 30 June 20ZZ) is actually the same business that was carried on at the test time.

66. Whether Headco carried on the same business is a question of fact.

67. Based on the information provided and the facts of this case, and having regard to the principles expressed in TR 1999/9, it is considered that the business conducted by Headco during the 20ZZ income year is the same as the business carried at the relevant test times, notwithstanding that there were acquisitions and closures of parts of the business and to some degree elements of the products produced. The changes that occurred are to an insufficient degree to have resulted in a change to Headco's overall business. The Commissioner is therefore satisfied that the SBT in subsection 165-210(1) of the ITAA 1997 has been passed.

Paragraph 165-210(2)(a) of the ITAA 1997- New business test

68. As previously highlighted, in addition to meeting the positive limb of the SBT, paragraph 165-210(2)(a) of the ITAA 1997 requires that the company has not, at any time during the SBT period, derived assessable income from a business of a kind which it did not carry on before the test-time (the new business test).

69. Based on the information provided and the facts of this case, and having regard to the principles expressed in TR 1999/9, it is considered that Headco did, during the SBT period, derive assessable income from a business of a kind which it did not carry on before each of the relevant test-times i.e. of 30 June 2009 and 1 July 2009 in regards to the license fee income received from Relatedco.

70. It is however considered that the receipt of the license fee income does not breach the new business test on the basis that this income falls within the de minimis exception.

Paragraph 165-210(2)(b) of the ITAA 1997- New transaction test

71. The new transactions test requires that the company did not, at any time during the period of recoupment, derive income from a transaction of a kind it had not entered into in the course of its business operations before the change-over.

72. In the 'new transactions' test, where a new transaction is considered 'of a different kind' from the transactions at the test time the test will not be satisfied. 'Transaction', in this reference incorporates every means or event by which income is derived. The test looks at all transactions, not merely those that are 'isolated' or 'independent' (TR 1999/9 paragraph 80). Derivation of small, insignificant amounts of income will not cause the company to fail the new transactions test.

73. It is also noted that the application of the new transactions test, although potentially broader in application, has correlations with the new business test particularly when assessing:

(i) 'whether a business or a transaction is 'of a kind' entered into in the course of business operations before the change-over'; and

(ii) the recognition of a de minimis exception.

74. The bulk of Headco's assessable income is derived from sales, with other minor amounts of interest income and gains from the disposal of plant and equipment. These transactions would not cause Headco to fail the new transactions test as the nature of the income is consistent from 200Y and/or income from transactions 'of a kind' that may be entered into in the course of Headco's business operations. Apart from this income, there are no other items of assessable income that would cause Headco to fail the new transactions test during the SBT period. This conclusion also takes into consideration those issues reviewed in respect of the new business test.

75. It is therefore considered that the new transaction test will have no application to the current circumstances and as such will not cause the SBT to be failed.

Subsection 165-210(3) of the ITAA 1997- Anti-avoidance provision

76. Subsection 165-210(3) of the ITAA 1997 is a provision designed to prevent a taxpayer company from satisfying the SBT tests where the company commenced to carry on new businesses or entered into a new kind of transaction prior to the change-over, in anticipation of obtaining a deduction for a prior year loss, a current year loss or a bad debt respectively.

77. In the current circumstances, based on an objective review of the facts and information provided, there is no indication that that Headco varied its business activities or transactions to enable it to satisfy the SBT in anticipation of allowing the transfer of the prior year tax losses. As such subsection 165-210(3) of the ITAA 1997 will not apply to preclude satisfaction of the SBT.

Conclusion

78. Based on the above analysis, it is considered that the SBT in section 165-13 of the ITAA 1997 is satisfied in respect of each tax loss incurred by Headco in the income years ended 30 June 200Y to 30 June 20YY. These tax losses may therefore be eligible for recoupment in the 20ZZ income year.

Question 3:

If the tax losses of Subco can be transferred to the head company of the tax consolidated group, does the tax consolidated group satisfy the SBT in respect of these losses allowing for the transferred in tax losses to be recouped in the income year ended 30 June 20ZZ?

79. Once a tax loss is transferred to the head company of the joined group, section 707-140 of the ITAA 1997 provides that, for income years ending after the transfer, the head company is deemed to have made the tax loss for the income year in which the transfer occurs. This means that in the current circumstances, Headco is therefore treated as having made the tax losses transferred from Subco in the income year ended 30 June 200Y.

80. Before utilising a transferred tax loss in a subsequent income year, the head company is required to apply the general loss recoupment provisions.

81. As previously detailed, the SBT is a defined term under section 995-1 of the ITAA 1997, which states that the SBT has the meaning given by Subdivision 165-E of the ITAA 1997. In this regard, section 165-210 in Subdivision 165-E of the ITAA 1997 states that the company must satisfy the same business test, new business test, new transactions test and the anti-avoidance test.

82. For the purposes of applying the SBT tests to Subco's transferred tax losses, the SBT period is the income year in which the tax loss is sought to be claimed, which in this instance runs from 1 July 20YY to 30 June 20ZZ. Each test must be applied to the business the company carried on immediately before the 'test time'.

83. As with the tax losses incurred by Headco in its own right during the 200Y income year, the relevant test time for those tax losses previously transferred from Subco is the end of the tax loss year i.e. 30 June 2009.

84. For those reasons outlined above in response to Question 2, it is also considered that the SBT is satisfied in these circumstances in respect of the tax losses transferred to the head company of the consolidated group by Subco in income year ended 30 June 200Y. These tax losses may therefore be eligible for recoupment in the 20ZZ income year.