Income Tax Act 2007 section 412C

Claims for additional relief: carry-forward relief

Section 412C allows a lender who has an irrecoverable peer-to-peer loan loss that cannot be fully relieved in the current tax year to carry forward the unrelieved amount and set it against peer-to-peer loan interest received in the next four tax years.

• Where a lender has no peer-to-peer interest income in the year a loan becomes irrecoverable, or insufficient interest income to absorb the full loss, the unrelieved portion may be carried forward for up to four tax years
• The carry-forward claim covers only the part of the outstanding loan principal that could not be deducted under the primary relief (section 412A) or the sideways relief (section 412B) in the year the loss arose
• The carried-forward amount can only be set against interest income received on qualifying peer-to-peer loans, including loans made by the lender through any operator and loans where the right to receive interest has been assigned to the lender through an operator
• The detailed mechanics of how the carry-forward relief is applied against income are set out in section 412D