Rule – A company that has assessable income for a particular YA may be eligible to offset the income with losses carried forward from a prior YA as well as losses carried back from a subsequent YA.
Consider this scenario. There could be loss carried forward from YA2006 available to offset the
assessable income of $80,000 in YA 2007 in addition to the loss carried back from YA2009.
Question – What should the priority of offset be? Should it be carry forward first, then carry back, or vice versa?
Answer – Based on section 37E(1) and (17) of the Income Tax Act, the losses brought forward would be deducted first.