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ZachyD(Initiate)Initiate
22 Mar 2021

Situation: You have a net loss in the partnership that passes the assessable Income test. Thus qualifing as a deduction for the partners on their individual tax returns.

However, the individual partners have almost no other taxable income in their names.

Can the partnership CHOOSE/ELECT to defer the distributed partnership loss? OR, if they pass of of the non commecial loss test, MUST they deduction the full loss on their individual returns?

1,353 views
5 replies
1,353 views
5 replies

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Most helpful reply

_TombRadyr(Champion)Champion
22 Mar 2021

Hi @ZachyD,

This $6,000 loss will form a tax loss. This loss can be applied in the following income year.

Please see tax losses.

I may be wrong although this is my understanding. A post which may help can be found here.

Please let me know if you have other questions.

Regards,

TombRadyr

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_TombRadyr(Champion)Champion
22 Mar 2021

Hi @ZachyD

Your business loss can be deferred indefinitely 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.

Therefore, you will be required to deduct the loss in the partners return. If this creates a tax loss this can be carried forward.

Hope this helps,

TombRadyr

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OPTION to defer a loss | ATO Community