Loss carry forward and loss attributing qualifying companies

2010 amendment to the Income Tax Act 2007 to ensure a loss attributing qualifying company can carry forward a loss balance arising in an earlier income year.

Section HA 24(5) of the Income Tax Act 2007 has been amended to ensure that a loss attributing qualifying company is able to carry forward a loss balance arising in an earlier income year in which the company was a qualifying company, but prior to the company becoming a loss attributing qualifying company. Cross references in section IA 7(2) have also consequentially been updated.

Section HA 24(5), as originally enacted in the 2007 Act, incorrectly prevented a loss attributing qualifying company from carrying forward a loss balance arising in income years during which it was a qualifying company and before it became a loss attributing qualifying company.

Section HG 16(1)(c) of the 2004 Act (the corresponding provision to section HA 24(5)) permitted a qualifying company that later became a loss attributing qualifying company to carry forward unused tax losses that arose during the years in which the company was a qualifying company but not a loss attributing qualifying company.

Section HA 24(5) has been amended retrospectively and new subsections HA 24(5B) and (5C) inserted to correct this unintended change by restoring the effect of section HG 16(1)(c) of the 2004 Act.