Income tax, CGT and entities

Non-commercial losses

The non-commercial loss rules can stop an individual from using a loss from a business activity against their other income, such as salary, in the year it is made. To use the loss in that year, the activity must meet one of the tests in the rules, and the individual's income must be below the limit the law sets for the year. If it does not pass, the loss is deferred and carried forward to be used against future income from the same activity. Primary production and professional arts businesses have special treatment. The ATO publishes the four tests and the income limit, and a practice should work through them with the client's figures.

General information, not tax advice. The rules change, so check the source page above for the current position. Fedix is developed by Tax7 R&D Pty Ltd.