Loss Relief Upon Incorporation (s.86)

Question 1

What loss relief is available when a individual transfers their business to a company?

Answer 1

Section 86 ITA 2007

Question 2

How is the loss re: s.86 ITA 2007 relieved?

Answer 2

The loss can be carried forward and received against any income taken by the former sole trader from the new company.

Question 3

What are the 3 requirements to qualify for s.86 loss relief?

Answer 3

Requirements to qualify for s.86 loss relief:

• more than 80% of the consideration is in the form of shares; and that
• these shares are still retained in the tax year that the relief is to be taken;
• the company must also still be carrying on the trade.