The non-commercial loss rules don’t apply to companies.

A company can carry forward a tax loss indefinitely and use it when it chooses, provided it has maintained the same majority ownership and control.

If there is a change of at least 50% ownership or control of a company, the company can only claim losses if it satisfies the:

• same business test, or
• similar business test, which applies to losses incurred in an income year beginning on or after 1 July 2015.

A company that has not maintained the same majority ownership will not be able to use its carried-forward tax losses if it has closed its business completely. This is because it will fail the ‘same business test’ and similar business test.

For guidance on how to apply the same business test and similar business test, see Taxation Ruling TR 1999/9 and Law Companion Ruling LCR 2019/1.