• 13. Losses

    U Tax losses carried forward to later income years

    Show at U the total tax losses incurred by the fund that are to be carried forward for deduction in later income years, under section 36-15 of the ITAA 1997. The amount at U is the sum of:

    • the fund’s tax loss for 2015–16 (reduced by any net exempt income) and
    • the fund’s prior year tax losses.

    Include prior year tax losses only to the extent that they have not been utilised (within the meaning given to that term by section 960-20 of the ITAA 1997).

    The fund’s 2015–16 net exempt income, if any, is taken into account to calculate the amount of its 2015–16 tax loss. If the fund’s 2015–16 net exempt income is greater than the amount by which the fund’s deductions (not including prior year tax losses) exceed its assessable income in 2015–16, the fund’s 2015–16 tax loss will be nil and the surplus net exempt income will reduce prior year tax losses. Example 3c shows the effect of exempt current pension income on tax losses.

    The meaning of ‘net exempt income’ is explained at M Tax losses deducted item 11. Do not include any net capital losses to be carried forward to later income years at U; show these at V Net capital losses carried forward to later income years and Item 3 in the CGT schedule, if a schedule is required.

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

    Do not include an amount of quarantined losses in respect of non-arm’s length income at U. You should keep a record of the quarantined loss amount with the fund’s tax record.

      Last modified: 15 Jul 2016QC 48112