Who can claim
This deduction is available to companies.
- A tax loss was validly incurred and remains available after prior applications.
- The company satisfies the continuity of ownership test or, where available, the business continuity test and associated integrity rules.
What you cannot claim
- A capital loss is not an ordinary tax loss and cannot reduce ordinary income.
- Do not claim a company loss where ownership, control or business-continuity requirements are not met.
- Individual prior-year tax losses and deferred non-commercial business losses use separate rules.
How the amount is worked out
Identify the available carried-forward company tax loss, apply ownership, control, business-continuity and integrity tests, then deduct only the amount permitted against current assessable income. Retain any unapplied balance.
Records the ATO expects
- Prior-year company tax returns
- Loss register
- Ownership and control records
- Continuity and business-continuity workpapers
Before you rely on this rule
Confirm continuity, business-continuity and integrity requirements before entering the available company tax loss.
Where this rule comes from
Primary source: Income Tax Assessment Act 1997 Division 36 (Compilation 266 in force 1 July 2026). Reviewed 30 July 2026. Covers the 2025-26 and 2026-27 income years.
Supporting sources:
- ATO business losses (Updated 6 May 2025)