Enhanced Loss Carry Back – Priority issue

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.

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