This question is about tax losses from earlier income years for which you may be able to claim a deduction in 2020–21.
Do you have tax losses from earlier income years?
No |
Go to Taxable income or loss 2021, or return to main menu Individual tax return instructions 2021. |
Yes |
Read on. |
Do not show at this item:
- capital losses; go to question 18 Capital gains 2021
- expenses and losses in relation to earning foreign source income; go to question 20 Foreign source income and foreign assets or property 2021
- deferred non-commercial business losses from a prior income year
- for partnership activities; go to question 13 Partnerships and trusts 2021
- for sole trader activities; go to P8 Business income and expenses in Business and professional items 2021.
Answering this question
Complete this item if you have a tax loss from an earlier income year which you have not claimed as a deduction.
You may have a tax loss at item L1 in 2020–21 which you may be able to claim as a deduction. You have to complete this item whether or not you are able to claim a deduction for the loss in 2020–21.
If you became bankrupt before 1 July 2020, or were released from debts under an arrangement entered into under the bankruptcy laws before 1 July 2020, you generally cannot claim a deduction for tax losses incurred before you became bankrupt or were released from the debts.
If you have tax losses from more than one earlier income year, you should generally deduct the earliest losses first.
To complete this item you will need records of your tax losses from earlier income years.
Completing your tax return
The amount of tax losses from earlier income years that you write at Q and R item L1 is the amount of tax losses you carried forward from 2019–20 less the amount of your net exempt income for 2020–21.
You need to separate your losses into primary production losses and non-primary production losses. Primary production activities are described in Information for primary producers 2021.
Part A – Losses carried forward from earlier income years
Use Worksheet 1 to work out what to write at Q and R ite L1.
Step 1
Write at row a in Worksheet 1 the total amount of tax losses you have available from earlier income years. Do not include non-primary production losses from 1988–89 or earlier years.
Separate the amount at row a into your losses from primary production and from non-primary production. Write the amounts at rows b and c respectively.
Step 2
Write at row d the total of your exempt income for 2020–21, if any (see Amounts that you do not pay tax on 2021 to find out what amounts are exempt income).
Step 3
Write at row e the total expenses (other than capital expenses) incurred in earning your exempt income. Include any foreign tax payable on your exempt income.
Step 4
Take row e away from row d and write the answer at row f. If row e is more than row d, write 0 at row f.
Step 5
If row f is more than row a, you do not have any losses you can claim at this item. Leave item L1 blank and go to Taxable income or loss 2021. Otherwise, take row f away from row a and write the answer at row g.
Step 6
- If you have an amount at row b but not at row c, take row f away from row b and write the answer at row h.
- If you have an amount at row c but not at row b, take row f away from row c and write the answer at row i.
- If you have amounts at both rows b and c, you choose how much of row f to take from each of rows b and c.
You cannot have a negative amount at rows h or i, and the total of rows h and i must equal row g.
You cannot have a negative amount at rows h or i.
The total of rows h and i must equal row g.
Step 7
Transfer the amount at row h to Q item L1.
Step 8
Transfer the amount at row i to R item L1.
Step 9
If the amount at Subtotal on page 4 of your tax return is a loss, go to Step 19. Otherwise, read on.
Part B – Losses claimed in 2020–21
The following steps will help you work out what to write at F and Z at item L1 if the amount at Subtotal is not a loss.
Step 10
If the amount at Subtotal is more than, or equal to, the amount at row g in worksheet 1, go to Step 17. Otherwise, read on.
Step 11
If the amount at Subtotal is more than, or equal to, the amount at Q item L1, go to Step 14.
Otherwise, transfer the amount at Subtotal to F item L1.
Step 12
Take the amount at F away from the amount at Q item L1. The answer is the amount of primary production losses you carry forward to 2021–22. Keep a record of it for next year.
Step 13
The amount at R item L1 is the amount of non-primary production losses you carry forward to 2021–22. Keep a record of it for next year.
You have finished this question. Go to Taxable income or loss 2021.
Step 14
Transfer the amount at Q item L1 to F item L1.
Step 15
Take the amount at F item L1 away from the amount at Subtotal. Write the answer at Z item L1.
Step 16
Take the amount at Z item L1 away from the amount at R item L1.
The answer is the amount of non-primary production losses you carry forward to 2021–22. Keep a record of it for next year.
You have no primary production losses to carry forward to 2021–22.
You have finished this question. Go to Taxable income or loss 2021.
Step 17
Transfer the amount you wrote at Q item L1 to F item L1.
Step 18
Transfer the amount you wrote at R item L1 to Z item L1.
You have no primary production losses or non-primary production losses to carry forward to 2021–22.
You have finished this question. Go to Taxable income or loss 2021.
Part C – If the amount at Subtotal is a loss
Step 19
If the amount you wrote at Subtotal is a loss, leave F and Z at item L1 blank.
Step 20
Use Worksheet 2 to work out the primary production losses you carry forward to 2021–22 and the non-primary production losses you carry forward to 2021–22.
Make sure you show all losses as negative amounts in Worksheet 2. Amounts you write at rows t, u, v and w may be losses. If so, show them as negative amounts.
Step 21
If the amount at row x is zero, then the amount at Q item L1 is the amount of primary production losses you carry forward to 2021–22. Keep a record of it for next year.
If the amount at row x is not zero, then add the amount at row x to the amount at Q item L1. When adding these two amounts ignore the fact that they are both negative amounts. The answer is the amount of primary production losses you carry forward to 2021–22. Keep a record of it for next year.
Step 22
If the amount at row y is zero, then the amount at R item L1 is the amount of non-primary production losses you carry forward to 2021–22. Keep a record of it for next year.
If the amount at row y is not zero, then add the amount at row y to the amount at R item L1. When adding these two amounts ignore the fact that they are both negative amounts. The answer is the amount of non-primary production losses you carry forward to 2021–22. Keep a record of it for next year.
You have finished this question. Go to Taxable income or loss 2021.
Step 23
The amount at Q is your primary production losses you carry forward to 2021–22.
The amount at R is your non-primary production losses you carry forward to 2021–22.
Keep a record of them for next year.
Where to go next
- Go to Taxable income or loss 2021.
- Return to main menu Individual tax return instructions 2021.
- Go back to Subtotal 2021.