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