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M Tax losses deducted

Last updated 12 February 2019

Show at M the tax losses that the fund is claiming. The fund can claim tax losses only to the extent that its total assessable income exceeds total deductions (other than tax losses).

The amount of the fund’s tax losses brought forward must first be deducted from the amount of the fund’s net exempt income (section 36-15 of the ITAA 1997). The fund’s net exempt income is the fund’s gross exempt income less the expenses incurred in deriving that income. Example 4c shows the effect of exempt current pension income on tax losses.

If a fund has a substituted accounting period and is an early balancing fund, in calculating the tax losses take into account the foreign loss component of a tax loss only to the extent that it is deductible in the 2012–13 income year. For such funds, transitional rules still apply to limit the amount of the foreign loss component of any tax loss that can be deducted in the 2012–13 income year.

Tax losses are not the same as ‘capital losses’ which may result from a capital gains tax event. Do not show net capital losses at M. See V Net capital losses carried forward to later income years at item 13.

The trust loss legislation in Schedule 2F to the ITAA 1936 affects the deductibility of prior year losses by all trusts which are not excepted trusts (as defined in section 272-100 of Schedule 2F to the ITAA 1936), such as non-complying superannuation funds.

The fund may need to complete and attach a Losses schedule 2013 to its tax return; see Schedules and the Losses schedule instructions 2013.