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  • L1 Tax losses of earlier income years 2018

    This question is about tax losses from earlier income years for which you may be able to claim a deduction in 2017–18.

    Do you have tax losses from earlier income years?

    No

    Go to Taxable income or loss 2018, or return to main menu Completing your 2018 Individual income tax return instructions.

    Yes

    Read on.

    Do not show at this item:

    Answering this question

    Complete this item if you have a tax loss from an earlier income year which you have not claimed as a deduction.

    You may have a tax loss at item L1 this year which you may be able to claim as a deduction. You have to complete this item whether or not you are able to claim a deduction for the loss this year.

    If you became bankrupt before 1 July 2017, or were released from debts under an arrangement entered into under the bankruptcy laws before 1 July 2017, you generally cannot claim a deduction for tax losses incurred before you became bankrupt or were released from the debts.

    If you have tax losses from more than one earlier income year you should generally deduct the earliest losses first.

    To complete this item you will need records of your tax losses from earlier income years.

    Completing your tax return

    The amount of tax losses from earlier years that you write at Q and R item L1 is the amount of tax losses you carried forward from 2016–17 less the amount of your net exempt income for 2017–18.

    You need to separate your losses into primary production losses and non-primary production losses. Primary production activities are described in Information for primary producers 2018.

    Part A – Losses carried forward from earlier income years

    Use Worksheet 1 to work out what to write at Q and R item L1.

    Step 1

    Write at row a in Worksheet 1 the total amount of tax losses you have available from earlier years. Do not include non-primary production losses from 1988–89 or earlier years.

    Separate the amount at row a into your losses from primary production and from non-primary production. Write the amounts at rows b and c respectively.

    Step 2

    Write at row d the total of your exempt income for 2017–18, if any (see Amounts that you do not pay tax on 2018 to find out what amounts are exempt income).

    Step 3

    Write at row e the total expenses (other than capital expenses) incurred in earning your exempt income. Include any foreign tax payable on your exempt income.

    Step 4

    Take row e away from row d and write the answer at row f. If row e is more than row d, write 0 at row f.

    Step 5

    If row f is more than row a, you do not have any losses you can claim at this item. Leave item L1 blank and go to Taxable income or loss 2018. Otherwise, take row f away from row a and write the answer at row g.

    Step 6

    • If you have an amount at row b but not at row c, take row f away from row b and write the answer at row h.
    • If you have an amount at row c but not at row b, take row f away from row c and write the answer at row i.
    • If you have amounts at both rows b and c, you choose how much of row f to take from each of rows b and c.

    You cannot have a negative amount at rows h or i, and the total of rows h and i must equal row g.

    Worksheet 1

    Row

    Calculation

    Amount

    a

    Total tax losses from earlier years

    $

    b

    Primary production losses from earlier years

    $

    c

    Non-primary production losses from earlier years

    $

    d

    Exempt income for 2017–18

    $

    e

    Expenses relating to your exempt income

    $

    f

    Net exempt income for this year. Take row e away from row d.

    $

    g

    Total prior year losses available for use this year. Take row f away from row a.

    $

    h

    Primary production losses available for use. Take row f away from b.

    $

    i

    Non-primary production losses available for use. Take row f away from row c.

    $

    You cannot have a negative amount at rows h or i.

    The total of rows h and i must equal row g.

    Step 7

    Transfer the amount at row h to Q item L1.

    Step 8

    Transfer the amount at row i to R item L1.

    Step 9

    If the amount at Subtotal on page 4 of your tax return is a loss, go to Step 19. Otherwise, read on.

    Part B – Losses claimed in 2017–18

    The following steps will help you work out what to write at F and Z at item L1 if the amount at Subtotal is not a loss.

    Step 10

    If the amount at Subtotal is more than, or equal to, the amount at row g in worksheet 1, go to Step 17. Otherwise, read on.

    Step 11

    If the amount at Subtotal is more than, or equal to, the amount at Q item L1, go to Step 14.

    Otherwise, transfer the amount at Subtotal to F item L1.

    Step 12

    Take the amount at F away from the amount at Q item L1. The answer is the amount of primary production losses you carry forward to 2018–19. Keep a record of it for next year.

    Step 13

    The amount at R item L1 is the amount of non-primary production losses you carry forward to 2018–19. Keep a record of it for next year.

    You have finished this question. Go to Taxable income or loss 2018.

    Step 14

    Transfer the amount at Q item L1 to F item L1.

    Step 15

    Take the amount at F item L1 away from the amount at Subtotal. Write the answer at Z item L1.

    Step 16

    Take the amount at Z item L1 away from the amount at R item L1.

    The answer is the amount of non-primary production losses you carry forward to 2018–19. Keep a record of it for next year.

    You have no primary production losses to carry forward to 2018–19.

    You have finished this question. Go to Taxable income or loss 2018.

    Step 17

    Transfer the amount you wrote at Q item L1 to F item L1.

    Step 18

    Transfer the amount you wrote at R item L1 to Z item L1.

    You have no primary production losses or non-primary production losses to carry forward to 2018–19.

    You have finished this question. Go to Taxable income or loss 2018.

    Part C – If the amount at Subtotal is a loss

    Step 19

    If the amount you wrote at Subtotal is a loss, leave F and Z at item L1 blank.

    Step 20

    Use Worksheet 2 to work out the primary production losses you carry forward to 2018–19 and the non-primary production losses you carry forward to 2018–19.

    Make sure you show all losses as negative amounts in Worksheet 2. Amounts you write at rows t, u, v and w may be losses. If so, show them as negative amounts.

    Worksheet 2

    Row

    Calculation

    Amount

    p

    Amount from Subtotal

    This amount is a loss, show it as a negative amount.

    $

    q

    Amount from item D9 on page 4 of your tax return

    $

    r

    Amount from item D12 on page 15 of your tax return

    $

    s

    Add rows q and r.

    $

    t

    Add row s, which is either zero or positive to row p which is negative.

    If row t is positive, go to step 23.

    $

    u

    Amount from Net primary production distribution item 13 on page 13 your tax return

    $

    v

    Amount from B item 15 on page 14 of your tax return

    $

    w

    Add rows u and v.

    $

    x

    If row w is a loss and is the same or a greater loss than row t, write the amount from row t.

    If row w is a loss and is a smaller loss than row t, write the amount from row w.

    Otherwise, write 0.

    $

    y

    If row w is a loss and is the same or a greater loss than row t write 0.

    If row w is a loss and is a smaller loss than row t, take row w away from t and write the answer.

    If row w is not a loss, write the amount from row t.

    $

    Step 21

    If the amount at row x is zero, then the amount at Q item L1 is the amount of primary production losses you carry forward to 2018–19. Keep a record of it for next year.

    If the amount at row x is not zero, then add the amount at row x to the amount at Q item L1. When adding these two amounts ignore the fact that they are both negative amounts. The answer is the amount of primary production losses you carry forward to 2018–19. Keep a record of it for next year.

    Step 22

    If the amount at row y is zero, then the amount at R item L1 is the amount of non-primary production losses you carry forward to 2018-19. Keep a record of it for next year.

    If the amount at row y is not zero, then add the amount at row y to the amount at R item L1. When adding these two amounts ignore the fact that they are both negative amounts. The answer is the amount of non-primary production losses you carry forward to 2018–19. Keep a record of it for next year.

    You have finished this question. Go to Taxable income or loss 2018.

    Step 23

    The amount at Q is your primary production losses you carry forward to 2018–19.

    The amount at R is your non-primary production losses you carry forward to 2018–19.

    Keep a record of them for next year.

    Where to go next

      Last modified: 31 May 2018QC 54242