Leon operates a demolition business in a 50/50 partnership with his brother. The activity commenced in the year ended 30 June 2002. In the year ended 30 June 2002 each partner deferred a loss from the activity of $500.
The same activity is carried on by the partnership in the year ended 30 June 2003. The business records for this activity for the year ended 2003 show the following results:
P/ship |
Leon's share |
|
Total business income |
$14,000 |
$7,000 |
Total expenses |
$14,500 |
$7,250 |
Net income or loss for 2003 |
$500/L |
$250/L |
Deferred non-commercial loss for previous year |
$1,000/L |
$500/L |
Overall net income or loss for 2003 |
$1,500/L |
$750/L |
In addition, Leon has incurred $200 motor vehicle expenses in the course of earning his partnership income.
For both income years:
- the primary production and professional artists business exception in subsection 35-10(4) does not apply
- the activity does not satisfy any of the four tests in Division 35:
- the assessable income test (s35-30)
- the profits test (s35-35)
- the real property test (s35-40)
- the other assets test (s35-45), and
- the Commissioner's discretion in s35-55 has not been exercised.
Leon's net loss for 2003 must be deferred to a future year.
Tax return completion
Leon's tax return would include the following details:
Leon will also require a copy of the 2003 Business and Professional Items schedule (BPI) and the 2003 Taxpack supplement (Supp).
Item |
Label |
Amount |
Comment |
12 (Supp) |
O |
250/L |
Leon's distribution from the partnership for 2003. |
Y |
700/L |
A prior year deferred loss is recorded here only if the loss is from an activity which is the same or similar to the current year activity. Also included are any other deductions incurred in earning the partnership income (ie. prior year loss of $500 plus $200 motor vehicle expense). |
|
Y |
P (type box)2 |
Part of the amount at Y is a deferred loss |
|
Net non-PP distribution |
950/L |
||
P3 (BPI) |
B |
1 |
Number of business activities |
P9 (BPI) |
Activity 1 |
||
D |
Demolition |
||
E |
42100 |
ANZSIC code required for tax agent prepared returns |
|
F |
P |
||
G |
8 |
Loss is required to be deferred |
|
H |
500 |
Prior year deferred loss from this activity |
|
I |
950 |
Net loss for 2002-03 for this activity. This is made up of the net loss from the partnership, the deferred loss from the prior year and the motor vehicle expenses. |
|
15 (Supp) |
F |
950 |
See item P9, label I |
H |
950 |
The sum of F & G |