Taxes Consolidation Act 1997 section 385

Terminal loss

Section 385 provides terminal loss relief, allowing a person who sustains a loss in the final 12 months of a permanently discontinued trade or profession to carry that loss back and set it against the profits of the same trade or profession for the three preceding years of assessment.

• Terminal loss relief applies to sole traders and partners in a partnership whose trade or profession has been permanently discontinued; the loss is set off against trading profits only, not other income.
• The terminal loss is carried back against the profits of the three years of assessment preceding the year of discontinuance, with relief given against the most recent year first.
• A terminal loss cannot displace relief already given or capable of being given for losses or capital allowances from earlier periods; all other reliefs must be exhausted first.
• Terminal loss relief is an income tax relief only; it does not reduce liability to USC or PRSI, and claims for repayment of tax must generally be made within four years of the year of cessation.

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