Claiming tax losses

If you operate a business that makes a loss, you can generally carry forward that loss and may be able to claim a deduction for it in a future year.

The rules differ for different business structures. If you’re a sole trader or a partner in a partnership, you may be able to claim business losses by offsetting them against other income – for example, income you earn from salary

You incur a tax loss when the total deductions you can claim for an income year (excluding tax losses from earlier income years) are more than your total assessable income and net exempt income. (Net exempt income is income that is exempt from tax but taken into account when carrying forward losses.)

There are some deductions you cannot use to create or increase a tax loss, including donations or gifts and personal super contributions.

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Last modified: 13 Mar 2015QC 33708