Offsetting current year losses against other income

If you operate as a sole trader or an individual partner in a partnership, you may be able to claim business losses by offsetting them against your income from other sources, such as wages. However, you will need to meet the requirements of the non-commercial business loss rules


This applies to sole traders and individual partners in a partnership only.

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If you're a sole trader or an individual partner in a partnership and you make a net loss from your business activity, you may be able to claim that loss by offsetting it against your other income (such as salary or investment income) for that year.

You may be able to offset the loss against your other income if one of the following applies:

  • your business is a primary production business or a professional arts business and you make less than $40,000 (excluding any net capital gains) in an income year from other sources
  • your income for non-commercial business loss purposes is less than $250,000, and either:
    • your assessable business income is at least $20,000 in the income year
    • your business has produced a profit in three out of the past five years (including the current year)
    • your business uses, or has an interest in, real property worth at least $500,000, and that property is used on a continuing basis in a business activity (this excludes your private residence and adjacent land)
    • your business uses certain other assets (excluding motor vehicles) worth at least $100,000 on a continuing basis.
  • you have been granted a Commissioner's discretion allowing you to offset the loss.

If you do not meet any of these requirements, you cannot offset your business loss against any of your other assessable income for that income year. However, you can defer the loss or carry it forward to future years. If your business makes a profit in a following year, you can offset the deferred loss against this profit.

See also:

Last modified: 13 Mar 2015QC 33729