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Can someone please explain me the tax losses on investment carried forward part? can’t seem to wrap my head around it
The tax is calculated in appendix 1 of the answer.
Given that in year 1 the taxable profit (calculated in the normal way) is a loss, then there is no tax payable. The tax loss of 14,650 is carried forward and subtracted from the taxable profit in year 2. Since there remains a loss of 7888 then again there is no tax payable and the remaining loss is subtracted from the taxable profit in year 3 which leave a profit of 1034 subject to tax.
In future you must ask in the Ask the Tutor Forum if you want me to answer – this forum is for students to help each other.