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IA 8: Restrictions relating to schedular income
or “Rules for using tax losses when calculating schedular income tax”
You could also call this:

“Rules for using tax loss components in order”

You need to use tax loss components in the order you got them. This means you use the oldest ones first.

If you have ring-fenced tax losses, you also need to use them in the order you got them.

For groups of companies that are consolidated or when companies join together, they can decide the order to use their tax loss components if they’re from the same tax year. They need to tell the Commissioner about this decision. If they don’t tell the Commissioner, they must use the amounts evenly across all the components.

There’s a special rule about a certain type of tax loss component. This component is related to something called a ‘specified activity net loss’. The rule says that this component is considered to have arisen when the original specified activity net loss arose.

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Next up: IA 10: Amended assessments

or “How changing past tax assessments affects your tax losses”
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Part I Treatment of tax losses
General rules for tax losses

IA 9Ordering rules

  1. Tax loss components that are included in a tax loss must be used in the order in which they arose.

  2. Ring-fenced tax losses must be used in the order in which they arose.

  3. For a consolidated group or on the amalgamation of companies, tax loss components that the consolidated group or the companies have for the same tax year must be used in the order decided, as applicable, by the consolidated group or the amalgamated company, who must also notify the Commissioner of the decision. Without notification, the amounts must be used on a pro rata basis.

  4. For the purposes of subsection (1), the tax loss component under section IA 2(4)(g) arose when the specified activity net loss, that is referred to in the definition of unused specified activity net loss and that makes up the tax loss component, arose.

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Notes
  • Section IA 9(4) heading: inserted, on , by section 145(1) (and see section 145(3) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
  • Section IA 9(4): inserted, on , by section 145(1) (and see section 145(3) for application) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
  • Section IA 9 list of defined terms unused specified activity net loss: inserted, on , by section 145(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).