Income tax losses ― overview

Produced by a Tolley Personal Tax expert

Personal Tax

Guidance

Income tax losses can arise due to a number of reasons, but not all losses can be relieved against total income and some losses can only be set against certain types of component income. The table below is a summary of the main reliefs for income tax losses.

Summary of guidance notes ― relief for income tax losses

Type of loss	Summary of the potential set off of income losses (other than trading losses)	Guidance note	Legislative reference
Current year trading losses	For established businesses, current year trading losses may be set against income or gains in current or preceding years, and against income in future years subject to particular conditions. As there is a choice of loss relief there are planning aspects to consider to ensure the best outcome for the taxpayer	Relief for current year trading losses ― planning considerations; Sole trader losses ― established trades	ITA 2007, ss 64, 71, 83; TCGA 1992, ss 261B, 261C
Trading losses in opening and closing years	Losses in the first four years of trading, losses

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