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  • Additional losses beyond the period covered

    If there are additional losses from an agribusiness managed investment scheme (MIS) beyond the period for we have previously ruled, most individual participants must defer losses from that business activity until either:

    • the MIS business makes a profit in a following year, when some or all of the deferred loss can be offset against this profit up to the amount of the profit
    • a participant meets the income requirement and the MIS business passes one of the four tests in a following year, when deferred losses can be claimed against other income.

    We will consider exercising discretion for a further period in one of the three scenarios:

    1. The MIS is still within the lead time for producing a tax profit ('the lead time'), and there is an objective expectation that it will be profitable within the period that is commercially viable for the industry concerned. A tax profit refers to the requirement for a business activity to produce assessable income, for an income year, greater than the deductions attributable to it, for that year.
    2. The MIS is still within the lead time, special circumstances have extended the period before the scheme is expected to be profitable, and there is an objective expectation that it will be profitable within the period that is commercially viable for the industry concerned.
    3. The MIS is past the lead time and either  
      1. due to special circumstances, the MIS business would have produced a 'tax profit' or,
      2. for participants that meet the income requirement, the MIS business would have passed one of the tests.
       

    The responsible entity of the MIS may apply on behalf of participants for us to exercise discretion under the non-commercial loss rules for a further period.

    See also:

    Next step:

      Last modified: 01 Aug 2017QC 16137