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What is a loss for taxation purposes according to Division 36 of the ITAA (1997).
What is a loss for taxation purposes according to Division 36 of the ITAA (1997).
Solutions
Expert Solution
Loss for taxation purposes according to Division 36 of the ITAA (1997) is when the total deductions available to the company exceeds its assessable income and net exempt income for the assessment year. Such loss is known as loss for taxation purpose.
Such loss can be carried forward and can be claimed as deduction from the assessable income of the future years, provided that the business operated by the company for which such loss has been incurred is carried out. If the company doesn't follows the rule of continuity of business and ownership of business which are necessary for transferring the losses, then the company will not be able to take benefit of any loss incurred previously.
Therefore loss for taxation purpose is nothing but the deductions that the company is able to claim over and above it's assessable income and the difference between these values is termed as tax loss.
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