Guide to tax losses

What is a tax loss?

You generally make a tax loss when the total deductions you can claim for an income year exceed the total of your assessable and net exempt income for the year.

Deductions that do not give rise to a loss

However, there are some deductions you cannot use to create or increase a tax loss, including donations, gifts and personal super contributions.

Tax loss or capital loss?

A tax loss is different from a capital loss. A capital loss can only be offset against any capital gains in the same income year or carried forward to offset against future capital gains - it cannot be offset against income.

Australian and foreign income

Australian residents now calculate an overall tax loss on the basis of their worldwide income and deductions. Foreign residents calculate a tax loss on the basis of their Australian income and deductions incurred in earning that income.

	Exempt income is certain types of income that the tax law specifically exempts from income tax - most commonly certain government payments. Net exempt income is exempt income less the losses and outgoings (not including capital losses and outgoings) incurred in earning that income and any foreign tax payable on it. For more information, refer to Amounts that you do not pay tax on.
	Losses - home

Sections within What is a tax loss?

• Deductions that do not give rise to a loss
• Tax loss or capital loss?
• Australian and foreign income