Deductions that do not give rise to a loss
Certain deductions that would otherwise be allowable cannot be claimed as deductions where they would give rise to a tax loss. They are:
- payments of pensions, gratuities or retirement allowances to employees, former employees, or their dependents
- gifts or contributions made to deductible gift recipients
- payments made under conservation covenants
- personal superannuation contributions.
Tax loss or capital loss?
A tax loss is different from a capital loss.
A capital loss occurs when you dispose of a capital asset for less than its tax value. A capital loss can only be offset against any capital gains in the same income year or carried forward to offset against future capital gains – it cannot be offset against income.
Australian and foreign residents
Australian residents now calculate an overall tax loss on the basis of their worldwide income and deductions. Foreign residents calculate a tax loss on the basis of their Australian income and deductions incurred in earning that income.
See also:
A tax loss is when your total deductions exceed your assessable and net exempt income for the year.