"Tax losses carried forward to later income years and Total net income or loss can not both be greater than 0"
Note that CMN.ATO.TRT.433085 is an ATO error and cannot be avoided.
Scenarios are the following below:
Scenario #1) Reduced the 100% trust net income to nil ($0) by entering an equivalent amount in "Item 25 Tax losses deducted", This will result in a remaining balance of the prior period's tax loss carried forward as shown in "Item 27 Tax losses carried forward to later income years”.
For example: The total prior year loss as of 30/06/2023 is $32,050. The trust has a Net Income of $22,050 for the FY 2024 and a prior year tax loss of $22,050 is applied in item "25-Tax Losses Deducted", thus resulting to a net income of zero ($0).
After applying a portion of the prior year loss amounting to $22,050, the remaining Tax Loss Carried Forward to later income years is $10,000 under "Item 27" and the Trust's net income will be zero ($0)".
Scenario #2) Reducing only a portion of the trust net income amount by applying full amount of the Prior Tax Loss Carried Forward amount in "Item 25 Tax losses deducted". As a result, the trust's net income will remain positive and the balance in "Item 27-Tax losses carried forward to later income years" will be zero ($0)".
For example: The total prior year loss as of 30/06/2023 is $5,000. The trust has a net income of $22,050 and the entire prior year tax loss applied is $5,000 (100% of the accumulated prior year tax loss). The calculation is $22,050 - $5,000 = $17,050.
After applying the full prior year loss balance of $5,000, the remaining tax loss carried forward to later income years under "Item 27" will be zero ($0)" and the trust's net income will be a positive amount of $17,050.
NOTE: The "Item 27-Tax losses carried forward to later income years” can only be filled with positive amount if the Total Net Income (Net Australian income/loss + Net capital gain + Attributed foreign income - Listed country + Attributed foreign income - Unlisted country + Net amount of Other assessable foreign source income + Australian franking credits from a New Zealand franking company - Tax losses deducted) is less than $0.
It is necessary for prior year losses to be applied to the current year's taxable income, as required by the ATO. Users must apply these losses in “25 Tax losses deducted”. This rule is new for the FY2024, which is why for FY2023 and earlier, TRT could be lodged with carried forward losses.