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myTax 2017 Loss details

How to report deferred non-commercial business losses when you lodge your return using myTax.

Last updated 11 June 2017

Complete this section if you have a loss:

  • from a business activity you carried on either as a sole trader or in partnership (including a loss after deducting your partner expenses)
  • at Distribution from partnerships or Distribution from partnerships less foreign income
  • at Net personal services income
  • for the Net primary production or Net non-primary production sections at Business income or losses
  • from a foreign business shown at Other foreign income. If your activity is carried on partly in Australia and partly overseas, you need to combine the results of both to see if you have an overall loss from the activity before completing this item.

Non-commercial business losses

Under the rules for non-commercial business losses, you can use a 2016–17 loss from a business activity you conduct either as a sole trader or in partnership to calculate your 2016–17 taxable income only if it meets one of these conditions:

  • an exception applies
  • you meet the income requirement and one of the four tests is satisfied
  • you meet the income requirement and none of the four tests is satisfied, but the Commissioner of Taxation has exercised his discretion, or ruled that it will be exercised, to allow you to claim the loss
  • you do not meet the income requirement, but the Commissioner has exercised his discretion, or ruled that it will be exercised, to allow you to claim the loss.

For more information about the exceptions, the income requirement, the four tests and the Commissioner's discretion, see Business loss activity details.

You cannot claim losses arising from activities you conduct that are a private recreational pursuit or hobby, or if there is no likelihood of profit.

The rules for non-commercial business losses apply to both foreign and Australian business activities.

Deferring your loss

If you are unable to claim your loss this year because of these rules, you must defer the loss.

This deferred loss is not disallowed. Instead, you take it into account for the next income year in which you carry on this business activity or one of a similar kind.

The deferred loss is a deduction when calculating any net profit or loss from the activity in that future year. Your deferred loss deduction may be reduced if:

  • you earn net exempt income in the future year, or
  • you become bankrupt or are released from any debts by the operation of an Act relating to bankruptcy.

Whether any overall loss can be taken into account when you calculate taxable income for that future year depends on the application of the deferral rules for non-commercial business losses in that year.

If you are unable to claim your loss against other income in 2016–17 because of these rules, you must complete this section. myTax will automatically show the amount as a deferred non-commercial loss. This amount cannot be used to reduce your 2016–17 taxable income.

Completing this section

What you may need

  • Any written advice from the ATO that the Commissioner will exercise his discretion to allow you to deduct your loss from your business activity carried on either as a sole trader or in partnership with others.
  • If you are a partner in a partnership, you will need the following details for each business activity that you, as a partner, were involved in:
    • the amount of assessable income earned by the partnership for the activity
    • the share of partnership's assessable income, real property and certain other assets, attributable to partners who are not individuals
    • your share of income or loss from the partnership for the activity.
     
  • You may need to see Partnerships which has information on the special rules that determine whether a business activity you carry on in partnership with others satisfies any one of the four tests.
  1. For each business activity from which you made a loss, select Add and enter information into the corresponding fields.

    If you are having difficulty finding a Main business or professional activity description, see below.

    If you have a loss from a passive investment (for example from a rental property) at Distribution from partnerships less foreign income, see Investment losses.

    If you are unsure if a business activity has an overall loss, see Work out whether you have an overall loss.

  2. For Type of loss, select the most appropriate number code from the following list:
    • 0: Your loss is from a passive investment. You do not need to defer losses from passive investments. For more information see Investment losses.
    • 1: Your assessable income from the business activity for this income year was at least $20,000 and you met the income requirement.
    • 2: The business activity produced a profit for tax purposes in three out of the past five years (2012–13 to 2016–17) and you met the income requirement.
    • 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 was at least $500,000 and you met the income requirement.
    • 4: The value of certain other assets (except cars, motor cycles or similar vehicles) used on a continuing basis in carrying on the business activity was at least $100,000 and you met the income requirement.
    • 5: The ATO has written to advise you that the Commissioner will exercise his discretion to allow you to claim a loss for that business activity for 2016–17. This is where the Commissioner has issued a product ruling, or a private ruling, allowing losses to be claimed from an activity you participated in.
      • Some business activities may be covered by a product ruling or private ruling that does not relate to 2016–17. Use loss code 5 only if you have advice in writing that the Commissioner will exercise his discretion for 2016–17.
      • If you have applied for a private ruling for the Commissioner to exercise his discretion for 2016–17, but have not yet received the ruling, use loss code 8 unless another code applies.
       
    • 6: The loss was from a business activity you operated that was a professional arts business and your assessable income (excluding any net capital gain) from unrelated sources was 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 unrelated sources was less than $40,000.
    • 8: The above loss codes don’t apply. You must defer your loss.

     
  3. Enter the net loss details into the corresponding fields:
    • If the Type of loss is 8: None of the codes apply – loss deferred
      enter your net loss from the business activity in the following fields
      • Primary production – your share of total deferred non-commercial loss
      • Non-primary production – your share of total deferred non-commercial loss.
       
    • If the Type of loss is not 8: None of the codes apply – loss deferred
      enter your net loss from the business activity in the following fields
      • Primary production – your share of total loss
      • Non-primary production – your share of total loss.

       
     
  4. Enter the amount of deferred non-commercial business loss from a prior year for the business activity at Amount of deferred loss from prior year included in the above amount(s).

  5. If the Type of Loss is 8: None of the codes apply – loss deferred
    you must enter amounts in these three fields:
    • Deferred loss amount from carrying on a business of investing
    • Deferred loss amount from carrying on a rental property business
    • Remaining deferred loss amount.
      These amounts must add up to your net loss from this business activity.
      Enter zero if there is no amount to be shown.

     
  6. Select Save.

  7. Select Save and continue.

Having difficulty finding a Main business or professional activity description?

If you are, we recommend you take the following steps:

  1. Enter your activity into the Business industry code search toolThis link opens in a new window
  2. From the search tool results, click on the link for the most appropriate description for your activity.
  3. From here, you will see a number and a description (for example 69320 Accounting Services). Enter this description at Main business or professional activity in myTax.
    1. There are a limited number of descriptions from the Business industry code search tool that are not listed in myTax. If this applies to you, use the list below to determine what you should choose to enter at Main business or professional activity in myTax:
     
Main business or professional activities - myTax substitute

From the Business industry code search tool

In myTax

Nursery Production (Under Cover)

Nursery and Floriculture Production

Forestry

Forestry and Logging

Basic Organic Chemical Manufacturing

Basic Chemical Manufacturing

Computer and Electronic Equipment Manufacturing

Computer and Related Manufacturing

Waste Remediation and Materials Recovery Services

Waste Treatment, Disposal and Remediation Services

Other Agricultural Product Wholesaling

Agricultural Product Wholesaling

Clothing and Footwear Wholesaling

Textile, Clothing and Footwear Wholesaling

Sport and Camping Equipment Retailing

Recreational Goods Retailing

Telecommunications Services

Wired Telecommunications Network Operation

Taxi Service Operation

Taxi Service Operation (Owner Operator)

Taxi Driver

Taxi Driver (Except Owner Operator)

Superannuation Funds

Superannuation Funds or First Home Saver Account Trusts

Other Auxiliary Finance and Investment Services

Auxiliary Finance and Investment Services

Other Specialised Design Services

Architectural, Engineering and Technical Services

Investment losses

If your only loss is from a passive investment (for example from a rental property) at Distribution from partnerships less foreign income, complete a Loss details worksheet and show:

  • Description of activity enter 'Residential property operators'
  • Type of loss select '0: Passive investment - partnership'
  • Primary production - your share of total loss enter '0'
  • Non-primary production - your share of total loss enter '0'.

Continue to step 4.

If you have a loss from a business activity and a loss from a passive investment (for example from a rental property) at Distribution from partnerships less foreign income, then you are not required to report the loss from a passive investment. You need to complete a Loss details worksheet for each other business activity loss.

If you are unsure if a business activity has an overall loss see Work out whether you have an overall loss, or continue to step 2.

Work out whether you have an overall loss

Complete the worksheet for each business activity to determine whether you have an overall loss for that activity.

Worksheet

Row

Calculation element

    $    

a

Income from the activity shown at other sections:

  • gross interest
  • dividends (unfranked, franked and franking credit amounts)
  • farm management repayments
  • net capital gain
  • other foreign source income
 

 

b

Loss from the activity shown at:

  • primary production and non-primary production distribution from partnerships
  • net personal services income
  • net primary production and net non-primary production business income or losses

(Include the loss here as a positive amount)

 

c

Partner deductions attributable to the activity (including landcare operations)

 

d

Loss from the activity at other foreign income
(Include the loss here as a positive amount)

 

e

Add b, c and d.

 

f

Subtract e from a.

 

If the result at f is negative this activity has an overall loss and you must complete a Loss details worksheet. Continue to step 2.

If the result at f is zero or positive you do not have an overall loss for this business activity. If you have more than one business activity loss, complete a Loss details worksheet for each other activity. If you do not have a loss from another business activity show:

  • Description of activity enter the relevant description
  • Type of loss select 5: Commissioner's discretion
  • Reference select AN: NCL ruling code - Authorisation number for private ruling
  • Number enter '200926'.
  • Primary production - your share of total loss enter '0'
  • Non-primary production - your share of total loss enter '0'.

Continue to step 4.

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