Income Tax Act 2007 section 64

Trade loss relief against general income

Section 64 allows trade losses to be set against general income; paragraphs 19 and 20 of Schedule 2 provide transitional rules for the changeover from the old ICTA regime to the Income Tax Act 2007, dealing specifically with losses arising in 2007-08 and how they interact with the prior year 2006-07.

• A trade loss made in 2007-08 may be relieved against general income of the previous year, 2006-07, and if so the relief is given as it would have been under the old ICTA rules.
• Where a 2006-07 trade loss was blocked by the old commerciality restriction and a 2007-08 loss in the same trade is similarly blocked by the new equivalent restriction, a special override may apply.
• If the basis period for 2007-08 overlaps with 2006-07 and the old rules would not have blocked relief for the 2007-08 loss, the new commerciality restriction is disapplied for that loss.
• These transitional rules apply equally to professions and vocations as they do to trades.

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