Revenue E-Brief

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Revenue E-Brief Issue 35/2015, 26 March 2015

Terminal losses for Income Tax

A loss that is incurred by an individual in the last 12 months of a discontinued trade or profession and which cannot be otherwise relieved may be carried back and set against the profits of the same trade or profession for the 3 preceding years. The use of this relief, known as terminal loss relief and dealt with by Section 385 of the Taxes Consolidation Act 1997, has become more common in recent years. A new Tax and Duty Manual 12-05-06 setting out the main issues surrounding terminal losses, such as how to calculate the terminal loss, what relief is available and the time frames for making a terminal loss relief claim is now available on Revenue’s website.

Determining when a trade has actually ceased is very important when looking at claims for terminal loss relief. A new Tax and Duty Manual 04-03-06 has been created, setting out the general principles from established case law on some of the issues that arise when trying to determine the date of cessation.

26 March 2015