I have a partnership between a Super Fund and a Company that has a loss this year. Can I claim the company's portion of losses in the company tax return or does it need to be deferred? Do the Non-Commercial loss rules apply?
Hi @KLEFCO,
Yes, a company can claim its share of partnership losses in its company tax return. The non-commercial loss rules don't apply to companies – these rules only apply to individuals.
When a partnership makes a loss, each partner includes their share of the partnership loss in their own tax return according to the partnership agreement. For a company partner, the company's share of the partnership loss is treated as an ordinary loss and can be offset against the company's other assessable income in that income year, subject to the usual company loss rules.
The non-commercial business loss deferral rules under Division 35 only affect individuals who are carrying on a business either as a sole trader or in partnership. These rules determine whether an individual can offset a business loss against their other income (like salary and wages) or must defer the loss to a future year. Companies aren't subject to these restrictions.
The super fund partner will need to consider the non-commercial loss rules separately if it's a self-managed super fund with individual trustees, though super funds generally have different considerations around losses.
Include the company's share of the partnership loss in the company tax return at the appropriate loss section. You can find more information about company losses and how they're treated in the company tax return instructions for the relevant year.
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