Question 16 - Deferred non-commercial business losses

See also:        

Deferred non-commercial business losses (Individual tax return instructions 2013)

 

Did taxpayer conduct a business activity:

·as a sole trader that resulted in a loss, or
·as a partner in a partnership that resulted in a loss after deducting their expenses?

 

NO

Go to Question 17 - Net farm management deposits or repayments

YES

Read below.

 

STOP STOP

This question does not apply to activities that do not constitute carrying on a business - for example, the receipt of passive investment income.

 

YOU NEED TO KNOW

There are special rules relating to the deferral of non-commercial business losses.

The taxpayer can use a 2012-13 loss from a business activity the taxpayer conducted either as a sole trader or in a partnership to calculate the taxpayer's 2012-13 taxable income only where:

·the loss is due solely to a deduction claimed under the small business and general tax break
·an exception applies
·the taxpayer meets the income requirement and one of the four tests is satisfied
·the Commissioner has exercised his discretion or ruled that it will be exercised to allow the taxpayer to claim the loss.

 

MORE You need to read the following publications before you can complete this item:

·Business and professional items 2013 (contains the Business and professional items schedule for individuals 2013 (NAT 2816) and the Individual PAYG payment summary schedule 2013 (NAT 3647).
·Non-commercial losses: partnerships (NAT 3385)

The above publications can be found in Other publications.

 

WHAT YOU MAY NEED

·Non-commercial losses: partnerships - fact sheet (NAT 3385). This publication provides information on the special rules that apply to determine whether a business activity you carry on in partnership with others satisfies any one of the four tests. This publication is available on the Tax Office website or by phoning the Business Infoline.
·Any written advice from the Tax Office that the Commissioner will exercise his discretion to allow you to deduct the your loss from your business activity carried on either as a sole trader or in partnership with others.

 

EXCLAM NOTE

At item P9 Business loss activity details on the Business and professional items schedule for individuals 2013 you must record the three highest loss-making business activities (if applicable), regardless of whether or not:

·the loss is due solely to a deduction claimed under the small business and general business tax break
·the net loss from your business activity came within an exception
·you meet the income requirement and the net loss from your business activity satisfied one of the four tests
·the Commissioner had advised that he will exercise his discretion to allow the net loss from your business activity to be claimed this year
·you had carried on the business activity in a partnership or as a sole trader.

 

COMPLETING THIS ITEM

Deferred non-commercial business losses can be entered directly into the tax return or using the worksheet. Follow the steps if you choose to use the worksheet:

STEP 1

Click on the Item 16 Deferred non-commercial business losses underlined text to open the worksheet.

STEP 2

Enter the description and the amounts of the deferred losses from the partnership and sole trader activities.

STEP 3

To create additional entry, click on the "New" button and repeat step 2.

STEP 4

Save the worksheet and close it. The amounts will be automatically transferred to the respective labels F, G of the item 16. Total amount of the deferred losses will be shown in label H of the item 16.