Things you need to know
Declare at this question deferred non-commercial business losses. It doesn't apply to activities that don't constitute carrying on a business – for example, the receipt of passive investment income.
There are special rules relating to the deferral of non-commercial business losses. These rules apply to both Australian and foreign business activities.
You'll need to lodge a Business and professional items schedule 2025 before you can complete this question. You should lodge tax return using myTax or a registered tax agent. If you're unable to use myTax or a registered tax agent, contact us and we'll send you a paper tax return that includes the Business and professional items schedule 2025.
Safe harbour
You can consider using safe harbour if you make a loss from a business activity because your business is affected by either:
- bushfire or flood
- government-imposed lockdown, business closure or restrictions due to COVID-19.
You qualify for the safe harbour if you satisfy all of criteria of the Practical compliance guideline PCG 2022/1 Non-commercial business losses – Commissioner's discretion regarding flood, bushfire or COVID-19, as a sole trader, or as a partner in a partnership.
If the safe harbour applies, you can offset the loss (but not a past year's deferred loss) against other income in the relevant income year. You also won't need to seek a private ruling on whether the Commissioner would exercise his discretion to allow that loss to be offset.
You can use a 2024–25 loss from a business activity you conduct either as a sole trader or in a partnership to calculate your 2024–25 taxable income only where either:
- an exception applies
- you meet both
- the income requirement
- one of the 4 tests is satisfied
- you qualify and choose to apply for safe harbour
- the Commissioner has exercised his discretion or ruled that it will be exercised to allow you to claim the loss.
For more information on the safe harbour, exceptions, the income requirement, the 4 tests and the Commissioner's discretion, see P9 Business loss activity details in Business and professional items schedule instructions 2025.
Keep records of each of the net losses deferred for your separate business activities.
If you're unable to claim your loss this year because of these rules, you must defer the loss. This deferred loss isn't disallowed. Instead, you take it into account the next income year in which you carry on this business activity or a similar business activity.
The deferred loss is a deduction when calculating any net profit or loss from the activity in that future income year.
Whether any overall loss can be taken into account in your calculation of taxable income for that future income year will depend on the application of the non-commercial business loss deferral rules in that income year.
You must defer your loss by completing question 16 in your supplementary tax return. You will need to split the amount into primary production and non-primary production deferred losses. You can't use the amount at question 16 to reduce your 2024–25 taxable income.
Go to question 17 Net farm management deposits or repayments, if you don't conduct a business activity either:
- as a partner in a partnership that results in a loss or results in a loss after deducting your expenses
- as a sole trader that results in a loss.
What you need to answer this question
You'll need to lodge a Business and professional items schedule 2025 with your tax return, see Business and professional items schedule instructions 2025.
You'll also need:
- Partnership documents that have information on the special rules that determine whether a business activity you carry on in partnership with others satisfies any one of the 4 tests.
- Any written advice from us to you 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.
Completing your supplementary tax return
To complete this question, review and answer the following parts.
Part A
To complete this question, you need to read and complete the Business and professional items schedule 2025. For instructions, see Business and professional items schedule instructions 2025.
Part B
This part applies to you only if you carry on a business in partnership with others. Don't complete this part if you're in a partnership that doesn't carry on a business.
Are you a partner in a partnership?
- No – Go to Part C.
- Yes – Read on.
Did you make a net loss from a business activity carried on in partnership with others in 2024–25?
- No – Go to Part C.
- Yes – Read on.
If you make a net loss from more than one business activity in partnership with others, you need to answer the questions and follow the steps on this page for each of your business activities.
Does your net loss from that business activity come within an exception described at P9 Business loss activity details in Business and professional items schedule 2025?
- No – Read on.
- Yes – Go to Part C.
Do you meet the income requirement and your net loss from that business activity satisfies one of the 4 tests?
- No – Read on.
- Yes – Go to Part C.
For information on the income requirement and the 4 tests, see P9 Business income and expenses in Business and professional items schedule instructions 2025.
Do you qualify for and choose to apply the safe harbour in relation to your net loss?
- No – Read on.
- Yes – Go to Part C.
For information on the safe harbour, see P9 Business income and expenses in Business and professional items schedule instructions 2025.
Do you have a decision from us in writing advising that the Commissioner will exercise his discretion to allow you to claim a net loss from that business activity for the year?
- No – Follow the steps below.
- Yes – Go to Part C.
Step 1
Write the total of your net losses to be deferred from business activities you carry on in partnership with others at question 16 – label F in your supplementary tax return.
Step 2
Check that you include the amount of your deferred non-commercial business losses in working out your net distribution at questions 13 and 20 in your supplementary tax return. Otherwise, you will overstate your taxable income.
Step 3
Make sure you complete P3 and P9 in the Business and professional items schedule 2025.
Part C
Did you make a net loss from a business activity as a sole trader in 2024–25?
- No – Go to Part D.
- Yes – Read on.
If you make a net loss from more than one business activity as a sole trader, you need to answer the questions and follow the steps below for each of your business activities.
Did your net loss from that business activity come within an exception described at P9 in Business and professional items schedule 2025?
- No – Read on.
- Yes – Go to Part D.
Did you meet the income requirement and your net loss from that business activity satisfies one of the 4 tests?
- No – Read on.
- Yes – Go to Part D.
For information on the income requirement and the 4 tests, see P9 Business income and expenses in Business and professional items schedule instructions 2025.
Did you qualify for, and choose to apply, the safe harbour in relation to your net loss?
- No – Read on.
- Yes – Go to Part D.
For information on the safe harbour, see P9 Business income and expenses in Business and professional items schedule instructions 2025.
Have we advised you in writing that the Commissioner will exercise his discretion to allow you to claim a net loss from that business activity for the year?
- No – Follow the steps below.
- Yes – Go to Part D.
Step 1
Write the total of your net losses to be deferred from business activities as a sole trader at question 16 – label G.
Step 2
Check you include the amount of your deferred non-commercial business losses in working out your net income or loss at questions 14, 15 and 20 in your supplementary tax return. Otherwise, you'll overstate your taxable income.
Step 3
Make sure you complete P3 Number of business activities and P9 Business loss activity details in the Business and professional items schedule 2025.
Part D
Follow the steps to complete Part D.
Step 1
Add up any amounts of primary production deferred losses at question 16 – labels F and G. Write the total of primary production deferred losses at question 16 – label I.
Step 2
Add up any amounts of non-primary production deferred losses at question 16 – labels F and G. Write the total of non-primary production deferred losses at question 16 – label J.
Step 3
You must record the 3 highest loss-making business activities (if applicable) at P9 Business loss activity details in the Business and professional items schedule 2025, whether or not:
- the net loss from your business activity came within an exception
- you met the income requirement and the net loss from your business activity satisfies one of the 4 tests
- the Commissioner advises that he will exercise his discretion to allow the net loss from your business activity to be claimed this year
- you carry on the business activity in a partnership or as a sole trader.
Where to go next
- Go to question 17 Net farm management deposits or repayments 2025.
- Return to main menu Individual supplementary tax return instructions 2025.
- Go back to question 15 Net income or loss from business 2025.