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Home News 2021 Assessed losses: Is this the right time to introduce limitations?

Assessed losses: Is this the right time to introduce limitations?

Assessed Losses

In terms of current law, taxpayers may set-off the balance of their assessed loss carried forward from a prior tax year (“Year 1”) against income of the current year (“Year 2”). Provided a taxpayer carries on trading operations, it is entitled to carry forward its unutilised assessed loss balance to future years of assessment to set off against future income with the effect that the taxpayer will only become liable for income tax once their assessed loss is depleted and they realise taxable income.

The Draft Taxation Laws Amendment Bill, 2021 (“the Draft Bill”) proposes to restrict the ability of a company to set off its assessed loss carried forward from Year 1 against its income in Year 2. It is proposed for this amendment to come into operation on 1 April 2022 and to apply in respect of years of assessment commencing on or after such date.

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