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Similar business activities

Work out if you can group similar business activities together when considering the non-commercial loss rules.

Last updated 26 October 2022

Determining if business activities are similar

If you are carrying on more than one business activity and they are similar, you may group them together when considering the non-commercial loss rules. To decide whether business activities are similar, you could consider:

  • the assets they use
  • the nature of their operations
  • their location
  • the goods or services provided
  • the market conditions for the goods and services
  • any links between the activities of the two businesses.

Activities that may be similar include:

  • grazing sheep and grazing cattle
  • growing grapes and growing olives
  • manufacturing shirts and manufacturing jeans.

Activities that may not be similar include:

  • manufacturing goods and farming
  • repairing cars and making furniture
  • growing potatoes and providing contract services.

The above list of characteristics is not exhaustive. For more details and examples on when business activities are considered to be similar, see TR 2001/14 Income tax: Division 35 – non-commercial losses

If the business activities are not similar

If you are running 2 business activities that are not similar, they must independently pass a test for deducting a loss. This may mean that you can claim a tax deduction for a loss on one business activity but not for another.