Part D: Type of loss

You need to know

The code you use at G item P9 on the schedule will determine whether you can take into account your net loss from the business activity when calculating your taxable income this year.

Choose the most appropriate code from the following list.

1. Your assessable income from the business activity for this income year is at least $20,000.
2. The business activity has produced a profit for tax purposes in three out of the past five years (including the current year).
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 is at least $500,000.
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 is at least $100,000.
5. The Tax Office has advised you in writing that the Commissioner will exercise his discretion to allow you to claim a loss in relation to that business activity for this income year. This would include instances where the Commissioner has issued a product ruling or a private binding ruling allowing losses to be claimed from an activity you participate in.
6. The loss is from a business activity you operated that is a professional arts business and your assessable income (excluding any net capital gain) from sources not related to that activity is 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; a performing artist; or 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 sources not related to that activity is less than $40,000.
8. None of the above codes applies and the loss is required to be deferred.

Using loss code 5

Some business activities may be covered by a product ruling or private ruling that does not relate to the current income year. Only use loss code 5 where you have advice in writing that the Commissioner's discretion will be exercised for 2003–04. If you have applied for a private binding ruling about the exercise of the Commissioner's discretion for 2003–04 but have not yet received the ruling, you should use loss code 8.

For more information see Taxation Ruling TR 2001/14 Income tax: Division 35: non-commercial business losses.

Completing this part

Print the code you have chosen from the above list at G item P9 on your schedule.

Electronic lodgements

For some tax returns lodged electronically:

• Where there is a loss from a partnership from a passive investment - for example, from a rental property – it will be necessary to use code 0 at G item P9.
• Where you have correctly shown the relevant loss code but an electronic edit prevents you from lodging your return electronically, please phone the Small business infoline on 13 28 66 for assistance.