Treatment of net losses in corporate tax

Net losses under income in each business year are carried forward for certain years. Losses may only be carried forward in this way if a blue form tax return is filed for the business year in which the loss arose, and a final tax return is then filed every subsequent year. Note that if a corporation, for example, is a wholly owned subsidiary of a large corporation, the amount of loss that may be deducted from income cannot exceed certain percentage of income. Other corporations, such as prescribed small and medium-sized enterprises that file a blue return, are also allowed to carry back a loss to the business year commencing not more than one year prior to the date of commencement of the business year in which the loss arose, and receive a full or partial refund of the amount of corporate tax in the business year in which the loss was carried back.