Income Tax Act 2007 section 74ZA

No relief for tax-generated losses

Section 74ZA prevents individuals from claiming sideways relief or capital gains relief for trading losses that arise from tax avoidance arrangements.

• Where a person carrying on a trade, profession or vocation (alone or in partnership) makes a loss that arises directly or indirectly from tax avoidance arrangements, no sideways relief or capital gains relief is available for that loss.
• "Relevant tax avoidance arrangements" are any arrangements to which the person is a party and where a main purpose is to obtain a tax reduction through sideways relief or capital gains relief — covering any agreement, understanding, scheme, transaction or series of transactions, whether legally enforceable or not.
• An exception applies where the loss derives wholly from qualifying film expenditure, as defined in section 74D.
• Capital gains relief, for these purposes, means treating a trading loss as an allowable capital loss under section 261B of the Taxation of Chargeable Gains Act 1992.