Can I still take advantage of the new tax break if I don’t make a profit this year?

If I make a new investment under the 50% tax break, and this investment is a substantial one, it is possible the 50% is more than the annual income from that business entity.  So, can the balance be offset against other income? Or quarantined for offset against future years income? Or is the deduction lost?

I am thinking about the situation where a business model is built over an eight to 10 year period with the expectation of a loss in the first few years, but a profit overall.  Is the 50% break of any use in that situation?

Yes, it could be possible that your investment allowance entitlement is greater than the business income of the entity for the year.

Where the entity had other income then the investment allowance is deducted against all income for the year in which it is entitled to be claimed. The legislation does not seem to preclude the investment allowance giving rise to a tax loss. 

So if after offsetting the claim against income in the current year there is still a loss, the amount would be carried forward to be offset against future years’ income.

Where you have a situation where you are eligible for the investment allowance, but the entity does not produce an income for a number of years, any loss created by the investment allowance would be carried forward. So effectively the benefit of the investment allowance only triggers when you have a taxable income to apply it against.

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