• Activity 1

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    Description of activity

    Completing this item

    Describe the business activity from which you made the largest loss and print this at D item P9 on page 4of your schedule. If your business activity is the result of an investment in a tax effective arrangement, print the name of the project at D.

    Partnership or sole trader

    Completing this item

    At F item P9 print either P in the box at Partnership (loss from a business activity carried on in partnership with others) or S in the box at Soletrader (loss from a business activity carried on as a sole trader), as appropriate.

    Type of loss

    Select the most appropriate code from the following list and write it at G item P9 on page 4 of your schedule.

    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 ATO 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 is 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, as a performing artist, or as 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 you must defer your loss. Complete item 15 on your tax return (supplementary section).

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

    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. Use loss code 5 only if you have advice in writing that the Commissioner's discretion will be exercised for 2005-06. If you have applied for a private binding ruling about the exercise of the Commissioner's discretion for 2005-06 but have not yet received the ruling, you should use loss code 8 unless another code applies.

    Using loss code 8

    If you print code 8 at G, M or S item P9 you must defer your loss. You must also complete item 15 on your tax return (supplementary section).

    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 - you will need to use code 0 at G item P9.
    • You have correctly shown the relevant loss code but an electronic edit prevents you from lodging your return electronically, please phone the Business Infoline for assistance on 13 28 66.
     

    Did you use loss code 5 at G item P9?

    No, Go to Deferred non-commercial business losses from a prior year.

    Yes, If you used code 5 at G you must complete Reference for code 5 at C item P9 on page 4 of your schedule. Read on

    Reference for code 5

    Completing this item

    If your business activity is covered by a product ruling that includes advice that the Commissioner will exercise his discretion to allow a loss from that business activity:

    • print PR at C in the code section of Reference for code 5, item P9 on page 4 of your schedule
    • write the year of the product ruling at Y in the year section
    • write the product ruling number at A in the number section (do not include the year of the product ruling or the slash / at A).

    Alternatively, if your business activity is covered by a private ruling that includes advice that the Commissioner will exercise his discretion to allow a loss from that business activity:

    • print AN at C in the code section of Reference for code 5, item P9 on page 4 of your schedule
    • leave Y blank in the year section
    • write the authorisationnumber which was printed on the front page of your notice of private ruling at A in the number section.

    Stop

    You must provide one of these numbers if you used loss code 5 at GTypeofloss. Using an invalid ruling or authorisation number, one which does not apply to you or one which does not apply for the 2005-06 income year, may result in an understatement of your tax payable. Penalties and interest may apply.

    Deferred non-commercial business loss from a prior year

    Completing this item

    Write the amount of your deferred non-commercial business loss from a prior year for the business activity at H item P9 on page 4 of your schedule. Do not show cents.

    Net loss

    Completing this item

    Write your net loss from the business activity for 2005-06 at I item P9 on page 4 of your schedule. Do not show cents. For partners in a partnership this would be your share of the net loss from the business activity and includes any deferred non-commercial business losses from the prior year claimed at X or Y item 12 on your tax return (supplementary section).

    The example below will help you work out P9.

    Last modified: 01 Sep 2006QC 18499