A taxable capital gain reduces a locally derived assessed loss.

‘Taxable income’ means the aggregate of—

It is evident from this definition that taxable income can be a negative figure.

A taxable capital gain may not be set off against a foreign assessed loss or balance of a foreign assessed loss brought forward from the preceding year of assessment.

An assessed capital loss sustained during a year of assessment cannot be set off against a person’s ordinary income of a revenue nature. An assessed capital loss, therefore, neither decreases a person’s taxable income nor does it increase a person’s assessed loss of a revenue nature. Such an assessed capital loss is, therefore, ring-fenced and can be set off only against capital gains arising during future years of assessment.

If you want to read more about this area in more detail, please visit the Guide (Chapter 5).