Deferral of non-commercial business losses
From 1 July 2000, new laws apply to individuals with losses from carrying on non-commercial business activities (either alone or in partnership with others). These new laws do not apply if you operate a primary production business and your assessable income (except any net capital gain) from sources that do not relate to that business is less than $40 000. The new laws will also not apply where:
- the individual's business activity satisfies one of 4 tests or
- the Commissioner of Taxation exercises his discretion to allow the loss to be claimed.
Where the new laws do apply, the loss cannot be claimed in the year in which it arises. Instead, it is deferred to the next year in which the business activity is carried on and the loss is offset against any income from the activity in that year. Whether any remaining loss can be offset against other income will depend on the operation of the new laws in that year.
Note
For further information, see Taxation Ruling TR 2001/14-Income tax: Division 35-non-commercial business losses or visit the Australian Taxation Office (ATO) website at www.ato.gov.au