What does Schedule 2 paragraph 29 of the Income Tax Act 2007 do for LLP members?

Schedule 2 paragraph 29 provides transitional rules ensuring that trade losses of LLP members which were restricted under the old ICTA legislation are properly brought into the ITA 2007 carry-forward rules under section 109. This prevents restricted losses from being lost or overlooked when the new Act replaced ICTA.

How are restricted LLP trade losses from the old ICTA rules carried forward under ITA 2007?

Losses restricted under ICTA section 117 (as applied by section 118ZB) that could not be set sideways against other income or treated as allowable capital losses are included in the pool of unrelieved losses brought forward under section 109 of ITA 2007, allowing LLP members to use them against future trade profits.

How does paragraph 29 handle cross-references between ITA 2007 and the old ICTA provisions?

Paragraph 29 ensures references to section 109 of ITA 2007 include the equivalent old provision, section 118ZD of ICTA. Sideways relief under the new rules includes relief under sections 380 and 381 of ICTA, and capital gains relief includes the old FA 1991 section 72 provision, ensuring seamless legislative continuity.

Can an LLP member still use a trade loss that was restricted before ITA 2007 came into force?

Yes. Under this transitional provision, an LLP member's restricted trade loss from the ICTA era is included in their pool of unrelieved losses carried forward under section 109 of ITA 2007. In a later year when their share of LLP trade profits is sufficient, they can set the loss against those profits.

Income Tax Act 2007 Schedule 2 paragraph 29

Members of LLPs: carry-forward of losses

Schedule 2 paragraph 29 provides transitional rules ensuring that trade losses of LLP members which were restricted under the old ICTA legislation are properly brought into the new ITA 2007 carry-forward rules.

Trade losses of LLP members that were denied sideways relief or capital gains treatment under the old ICTA rules are included in the pool of unrelieved losses brought forward under section 109
References to section 109 in the new Act include the equivalent old ICTA provision (section 118ZD), ensuring continuity across the legislative change
Sideways relief under the new rules is treated as including relief that was available under sections 380 and 381 of ICTA
Capital gains relief under the new rules is treated as including the old FA 1991 provision allowing losses to be treated as allowable capital losses

Access full legislation.And much more.

By becoming a member, your team gets full access to Tax World research tools and source-backed tax resources.

Become a member