Page 49 - F1 Integrated Workbook STUDENT 2018

Corporrate Incoome Tax and Cappital Tax Computations

Exxampple 6

In ccountry X, trading lossses in anyy year can be carried back and set off
agaainst tradinng profits inn the previoous year, aand any unnrelieved loosses can be
carrried forwarrd to set aggainst the first available trade pprofits in fuuture yearss.

Halll and Co hhad the following taxaable profitss and lossees in year 11 to 4.
Yeaar Trrading
proffit/(loss)
1 2 25,000
2 (445,000)
3 15,000
4 3 35,000

Whhat are Halll and Co.’’s taxable profits inn each yeaar?

Sollution
Yeaar Tradding Workinngs
profit/(loss)
1 – – 25,000 – 25,000
2 – –
3 – – 15,000 – 15,000
4 30,0000 35,000 – 5,000 (balance of the e loss)

Thee trading looss is carried back firrst against the tradingg profit in yyear 1, thiss
must be donee to the maaximum exttent, i.e. yoou can't usse part of thhe profit foor
relieef if all of itt is neededd. The balaance of thee loss must then be ccarried
forwward againnst the firstt available trading proofit in year 3, again too the
maximum exttent requireed until it hhas been reelieved in ffull. There is no limit on
howw many years you are able to ccarry forwaard a tradinng loss.

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