Transferring Loss Items under Group Relief

These loss items are to be transferred/ claimed in the following order:

• Current year unutilised capital allowances;
• Current year unutilised trade losses; and
• Current year unutilised donations

Note: Income subject to tax at the higher rate will be transferred first, followed by the amount subject to tax at a lower rate (subject to the adjustment specified under Section 37B of Income Tax Act, if applicable).

• Loss items of foreign branches;
• Investment allowances;
• Loss items in respect of income wholly exempt from tax (e.g. loss from pioneer trade);
• Loss items in respect of specific categories of activities or trade where there are rules to quarantine the unutilised losses and capital allowances (e.g. income from finance leases under Section 10D, income from hiring motor vehicle under Section10H, etc);
• Loss items of companies given any of the incentives under the Economic Expansion Incentives Act (e.g. investments in new technology company, technopreneur investment incentive scheme and overseas investment and venture capital incentive);
• Unutilised Section 14Q deduction arising in and before YA 2012;
• Expenses of dormant companies for the current year that were not allowed to be deducted in the dormant company's tax computation. However, current year unutilised donations may be transferred under the GR system. Find out more about dormant companies.
• Current year unutilised losses arising from excess of expenses over investment income of investment holding companies. However, current year unutilised industrial building allowances/ land intensification allowance and donations may be transferred under the GR system. Find out more about investment holding companies.
• Current year unutilised losses/ capital allowances of Section 10E companies. However, current year unutilised industrial building allowances (effective YA 2007), land intensification allowance and donations may be transferred under the GR system. Please see e-Tax Guide Ascertainment of Income from Business of Making Investment (76KB).

A transferor company may transfer 100% of its loss items to a claimant company as long as the loss can be absorbed by the claimant company and the shareholding level is maintained at or above 75% throughout the basis period.

When shareholding falls below 75%

Where the ordinary shareholding level had fallen below 75% during the basis period, but is at least 75% on the last day of the basis period for a YA, the amount of loss items allowed to be transferred or claimed is restricted to the amount applicable to the continuous period ending on the last day of that basis period, during which the relevant holding company's ordinary shareholding level is maintained at or above 75%.

For an example on how to determine the quantum of loss items to be transferred if the continuous period does not cover the whole basis period, you may refer to Frequently Asked Questions and How to Complete the Group Relief Forms (1.01MB).

When new companies are involved

Where the first set of financial statements is submitted for a period exceeding 12 months, the losses to be transferred or claimed under GR should be ascertained after the losses or income of the new company have been apportioned to its respective Years of Assessment (YA).

For example, if the first set of financial statements is for the period from 1 Jun 2016 to 31 Dec 2017, the losses should be apportioned to YA 2017 (i.e. 1 Jun 2016 to 31 Dec 2016) and YA 2018 (1 Jan 2017 to 31 Dec 2017).

If the GR is for YA 2018, only the losses apportioned to this period can be transferred (for transferor) or the amount of losses to be claimed should be restricted to the assessable income apportioned to this period (for claimant).