IR4 Question 25 Net losses brought forward

Losses from CFCs are not included in Box 25—see Question 36 at IR4 Question 36 Foreign-sourced dividends.

Before a company is allowed to carry forward net losses, 49% continuity of minimum voting interest or market value interest must be maintained by a group of persons at all times, from the beginning of the year of net loss to the end of the year of carrying it forward (the continuity period).

To check whether the shareholder continuity requirements have been met, use the lowest percentage of economic interest held by each shareholder during the continuity period. To calculate the total lowest economic interest see Question 38 at IR4 Question 38 Lowest economic interests of shareholders.

There are two types of net losses—specified activity net losses and other net losses.

Specified activity net losses

These are net losses incurred before the 1991 income year. Any loss balance in relation to a specified activity that remained at the end of the 2018 income year must be offset against net income for the 2019 income year before taking into account other losses. The amount of this offset cannot exceed the net income. If the loss balance from specified activities incurred before the 1991 income year exceeds the net income for the 2019 income year, that excess amount is added to the tax loss for the year. The tax loss may be grouped with another company, subject to satisfying the commonality and continuity rules (see IR4 Question 27 Net losses and subvention payments).

Other net losses

Other net losses are all those incurred from the 1991 income year onwards (including any net loss arising from excess imputation credits) and any net losses that were not limited before 1991.

Write the total of all specified activity net losses and other net losses the company can bring forward to 2019 in Box 25A, and the amount the company has offset against 2019 income in Box 25B.

If the company can’t offset any net losses in the 2019 income year, write “0.00” in Box 25B.

You should be able to find the amount of net loss the company has to bring forward on the loss notice sent to you with the company’s 2018 income tax assessment. If you don’t have a loss notice, enter the details from your own records.