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FloraY1(Champion)Champion
15 Mar 2021

Dear Mr/Ms,

If a sole trader has a large amount of deferred non-commercial losses from prior years and he is eligible to offset it against other income now as the assessable income test passed with the turnover of more than $20K, but after offset, he is still having some deferred non-commercial losses remaining, then will he be able to carry forward the remaining loss as Tax Losses in Z of Li or he needs to leave this in P9 Net Loss to be carried forward?

Thanks for your help.

1,845 views
4 replies
1,845 views
4 replies

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Most helpful reply

_TombRadyr(Champion)Champion
15 Mar 2021

Dear FloraY1,

Your business loss can be deferred indefinitely at lable P9 until one of the following applies:

  • there is a profit from your business activity, in which case the deferred loss can be offset to the extent of the profit from the business activity
  • you meet the requirements set out for Non-commercial losses
  • the Commissioner exercises his discretion to offset the loss.

So once you have met the non-commercial loss rules you must apply the losses. If you have applied the losses fully and you are left with a negative taxable income you have a tax loss.

Iteme L1 only deals with losses of earlier income years. So in the year that you met the non-commercial loss rules and have ended up in a tax loss label L1 R & Z should be blank. In the following year the loss will be reported at Label L1 R or Q.

Please see the following for more detail.

I hope this helps,

TombRadyr.

All replies

Most helpful reply

_TombRadyr(Champion)Champion
15 Mar 2021

Dear FloraY1,

Your business loss can be deferred indefinitely at lable P9 until one of the following applies:

  • there is a profit from your business activity, in which case the deferred loss can be offset to the extent of the profit from the business activity
  • you meet the requirements set out for Non-commercial losses
  • the Commissioner exercises his discretion to offset the loss.

So once you have met the non-commercial loss rules you must apply the losses. If you have applied the losses fully and you are left with a negative taxable income you have a tax loss.

Iteme L1 only deals with losses of earlier income years. So in the year that you met the non-commercial loss rules and have ended up in a tax loss label L1 R & Z should be blank. In the following year the loss will be reported at Label L1 R or Q.

Please see the following for more detail.

I hope this helps,

TombRadyr.

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Should enter unused deferred non-commercial losses from prior years in P9 or Z of L1 Tax Losses? | ATO Community