• Multiple business activities

    If you are running more than one business activity and they are similar, they can be grouped together to establish whether you can deduct a loss.

    When are two business activities similar?

    To decide whether business activities are similar, you could consider:

    • the assets they use
    • the nature of their operations
    • their location
    • their funding basis
    • the goods and/or services provided
    • the economics of the market for those goods and services
    • any links between the activities of the two businesses
    • the time spent on these activities
    • the nature of expenses involved in each business activity
    • applicable laws or regulations
    • any relevant professional associations.

    For example, the following activities may be similar:

    • grazing sheep and grazing cattle
    • growing grapes and growing olives
    • manufacturing shirts and manufacturing jeans.

    In contrast, the following business activities may not be similar:

    • manufacturing goods and farming
    • repairing cars and making furniture.

    What if businesses are not similar?

    If you are running two business activities that are not similar, they must independently pass a test for deducting a loss. This may mean, for example, that you can claim a tax deduction for a loss on one business activity but not for another.

    Find out more

    Paragraphs 49 to 54 of Taxation Ruling TR 2001/14External Link Income tax: Division 35 - non-commercial business losses provide more details on when business activities are considered to be 'of a similar kind'. Refer also to Example 2, paragraphs 124 to 130 of that ruling.

    End of example
    Last modified: 05 May 2015QC 45042