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Activity 1

Last updated 23 July 2020

Description of activity

Completing this item

Describe the business activity from which you made the largest loss and print this at D item P9 on page 4 of your schedule. If your business activity is the result of an investment in a tax effective arrangement, print the name of the project at D.

Partnership or sole trader

Completing this item

At F item P9 print either P in the box at Partnership (loss from a business activity carried on in partnership with others) or S in the box at Sole trader (loss from a business activity carried on as a sole trader), as appropriate.

Type of loss

Select the most appropriate code from the following list and write it at G item P9 on page 4 of your schedule.

  1. Your assessable income from the business activity for this income year is at least $20,000.
  2. The business activity has produced a profit for tax purposes in three out of the past five years (including the current year).
  3. The value of real property assets or interests in real property (excluding any private dwelling) used on a continuing basis in carrying on the business activity is at least $500,000.
  4. The value of certain other assets (except cars, motorcycles or similar vehicles) used on a continuing basis in carrying on the business activity is at least $100,000.
  5. The Tax Office has advised you in writing that the Commissioner will exercise his discretion to allow you to claim a loss in relation to that business activity for this income year. This is where the Commissioner has issued a product ruling or a private binding ruling allowing losses to be claimed from an activity you participate in.
  6. The loss is from a business activity you operated that is a professional arts business and your assessable income (excluding any net capital gain) from sources not related to that activity is less than $40,000. (A professional arts business is a business you carry on as an author of a literary, dramatic, musical or artistic work, as a performing artist, or as a production associate.)
  7. The loss is from a business activity you operated that is a primary production business and your assessable income (excluding any net capital gain) from sources not related to that activity is less than $40,000.
  8. None of the above codes applies and you must defer your loss. Complete item 16 on your tax return (supplementary section).

For more information, see Taxation Ruling TR 2001/14 Income tax: Division 35: non-commercial business losses and Taxation Ruling TR 2007/6 Income tax: non-commercial business losses: Commissioner's discretion.

Using loss code 5

Some business activities may be covered by a product ruling or private ruling that does not relate to the current income year. Use loss code 5 only if you have advice in writing that the Commissioner's discretion will be exercised for 2008–09. If you have applied for a private binding ruling about the exercise of the Commissioner's discretion for 2008–09 but have not yet received the ruling, you should use loss code 8 unless another code applies.

Using loss code 8

If you print code 8 at G, M or S item P9 you must defer your loss. You must also complete item 16 on your tax return (supplementary section).

Electronic lodgments

For some tax returns lodged electronically:

  • where there is a loss from a partnership from a passive investment – for example, from a rental property – you will need to use code 0 at G item P9
  • where you have correctly shown the relevant loss code but an electronic edit prevents you from lodging your tax return electronically, phone the Business Infoline.

Did you use loss code 5 at G item P9?

No

Go to Deferred non-commercial business loss from a prior year.

Yes

If you used code 5 at G you must complete Reference for code 5 at C item P9 on page 4 of your schedule. Read on.

Reference for code 5

Completing this item

If your business activity is covered by a product ruling that includes advice that the Commissioner will exercise his discretion to allow a loss from that business activity:

  • print PR at C in the code section of Reference for code 5, item P9 on page 4 of your schedule
  • write the year of the product ruling at Y in the year section
  • write the product ruling number at A in the number section (do not include the year of the product ruling or the slash / at A).

Alternatively, if your business activity is covered by a private ruling that includes advice that the Commissioner will exercise his discretion to allow a loss from that business activity:

  • print AN at C in the code section of Reference for code 5, item P9 on page 4 of your schedule
  • leave Y blank in the year section
  • write the authorisation number which was printed on the front page of your notice of private ruling at A in the number section.

Stop: You must provide one of these numbers if you used loss code 5 at G Type of loss. Using an invalid ruling or authorisation number, one which does not apply to you or one which does not apply for the 2008–09 income year, may result in an understatement of your tax payable. Penalties and interest may apply.

Deferred non-commercial business loss from a prior year

Completing this item

Write the amount of your deferred non-commercial business loss from a prior year for the business activity at H item P9 on page 4 of your schedule. Do not show cents.

Net loss

Completing this item

Write your net loss from the business activity for 2008–09 at I item P9 on page 4 of your schedule. Do not show cents. For partners in a partnership this would be your share of the net loss from the business activity and includes any deferred non-commercial business losses from the prior year claimed at X or Y item 13 on your tax return (supplementary section).

The example will help you work out P9.

QC83921