Income Tax Act 2007 section 66

Restriction on relief unless trade is commercial

Section 66 restricts the ability to claim trade loss relief against general income, requiring that the trade in question is carried on commercially and with a view to making profits.

• Trade loss relief against general income is only available if the trade is carried on commercially throughout the basis period and with a view to realising profits.
• A trade carried on with a reasonable expectation of profit is treated as being run with the intention of making profits; where the trade is part of a larger undertaking, profit is assessed by reference to the undertaking as a whole.
• If the way the trade is carried on changes during the basis period, the trade is treated as having been carried on throughout the basis period in the manner it is conducted by the end of that period.
• The restriction does not apply to losses arising from the exercise of functions conferred by or under an Act, and the section applies equally to professions and vocations as it does to trades.