Loss carried forward time limit
We made losses for three years. Can we use them later?
The situation
Unabsorbed business losses can be carried forward and set off against future business income, subject to a time limit.
The law
- Sec 77A, Income Tax Act 1967: Companies and LLPs furnish a return within 7 months after the accounting period ends
What it means for you
Losses that are not used within the allowed years lapse. Track the year each loss arose. Changes in shareholding can also affect use of losses for dormant companies. Check the current limit with LHDN.
What to do
- List losses by year of origin.
- Note the expiry year for each.
- Plan income to use older losses first.
- Keep the schedule in each Form C.
We can do this for youCompany tax return Form C and tax computation: MYR 1,200