Income Tax Act 2007 section 89

Carry back of losses on a permanent cessation of a trade

Section 89 provides for terminal trade loss relief, allowing individuals who permanently cease a trade to carry back their terminal losses against trading profits of the final year and the three preceding tax years.

• A person who permanently ceases a trade, profession, or vocation may claim terminal trade loss relief if they have made a terminal loss in that trade
• The total terminal losses (the "relievable loss") can be deducted when calculating net income for the final tax year and the three previous tax years
• The deduction can only be set against profits of the same trade — it cannot be offset against other sources of income
• Only losses from the final tax year, and the portion of any loss from the previous tax year falling within the 12 months before cessation, qualify as terminal losses