Income tax: Continuity of business activities – carrying forward losses arising in the income year of ownership continuity breach

This question we’ve been asked (QWBA) provides guidance on how the continuity of business activities rules in subpart IB of the Income Tax Act 2007 apply to losses arising in the income year in which a company breaches the continuity of ownership requirements. Uncertainty has arisen about whether that income year is an “earlier income year” under s IB 3(2), such that the losses can be carried forward. This QWBA confirms losses incurred in the income year of an ownership continuity breach can be carried forward. It is relevant to companies that have both an ownership continuity breach and a tax loss arising in the income year of the breach.

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