The Non Commercial Loss (NCL) rules apply to defer losses generated from business activities. For a full description of the NCL rules, refer to the Guide to non-commercial losses.
How do changes to your agribusiness MIS affect the operation of the NCL rules?
Changes to your agribusiness MIS may affect the operation of the NCL rules. If those changes affect your agribusiness MIS so that it will not make a profit within a commercially viable period for the industry, then you may not be covered by the product ruling.
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Deductions deferred under the NCL rules do not form part of the cost base of any asset associated with the business and are not taken into account when calculating any capital gain or loss on the cessation of the business.
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How do you know if you have deferred losses?
You should check your product ruling which will specify the income years when losses do not need to be deferred. For all other years the NCL deferral rules will apply and you must defer deductions until there is income from the activity against which they can be claimed.
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For more information about your product ruling and to find out the NCL status of your agribusiness MIS, refer to Tables of affected schemes (XLS, 372KB).
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What do you do if your agribusiness MIS is in administration?
Any continuing commitment to exercise the discretion will depend on what happens to the project as a result of the administration. The Commissioner's exercise of the discretion is conditional, and some events may cause it to be withdrawn.
Whether or not the discretion will continue to be exercised will depend on both of the following:
- the agribusiness MIS continuing, either with the current or a replacement responsible entity
- continuation of the same objective expectation in relation to the timing of income being received.
Where the commitment to exercise the discretion is to be withdrawn or altered, we will advise of the change by withdrawing or amending the product ruling.
If your agribusiness MIS is wound up following a period of administration the NCL discretion will no longer be exercised.
What if you have claimed deductions that should have been deferred?
You should check the relevant product ruling which will specify the income years when losses do not need to be deferred. For all other years the NCL deferral rules will apply and you must defer deductions.
If you have already claimed a deduction and you now realise that your deductions should have been deferred, you should request an amendment to the relevant income tax return to remove the deduction incorrectly claimed.
How do you treat payments you have received from the agribusiness MIS?
If you receive a statement or letter from the agribusiness MIS with an amount earned, you need to include this amount in your tax return. You will need to include this amount even if you did not actually receive the distribution, for example where the amount was applied to fees relating to your interest or applied against loans used to finance your investment.
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For more information you can:
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Sections within Ongoing operation of an agribusiness managed investment scheme
Last Modified: Thursday, 3 January 2013