Completing item 25 tax losses deducted
Show at label C Tax losses deducted tax losses from earlier income years, which are deductible in 2023–24 under section 36-15 of the ITAA 1997.
Exclude the film component of any tax loss (film loss). A film loss is shown, to the extent permissible, at item 18 Other deductions.
Don't show current year foreign losses here. They are included at item 23 Other assessable foreign source income.
Complete a Losses schedule 2024 and attach it to the trust tax return if the trust:
- is a listed widely held trust (as defined in Schedule 2F to the ITAA 1936), and
- is required to pass the same business test in order to claim a deduction for losses in 2023–24, or will be required to pass that test in respect of losses being carried forward to later income years.
For more information, see Subdivision 269-F of Schedule 2F to the ITAA 1936 and Losses schedule instructions 2024.
The following information will help you to complete label C:
- The total of any tax losses included here at label C Tax losses deducted can't exceed the amount of net income shown at item 24 Total of items 20 to 23.
- Complete item 27 Losses information if the income injection test under the trust loss provisions prevents the trust, including a family trust, from fully claiming a deduction for tax losses of an earlier income year in 2023–24: see Division 270 of Schedule 2F to the ITAA 1936.
For more information, see Trust loss provisions.
Beneficiaries with no interest in trust capital
A life tenant is a beneficiary with an interest in the income of the trust estate for the duration of their life, but with no interest in the capital of the trust.
If the trust includes a beneficiary who is a life tenant or a beneficiary with no interest in the capital of the trust, you can't claim a deduction for tax losses of earlier income years in calculating the share of those particular beneficiaries in the net income of the trust if the tax losses of previous years are required to be met out of corpus.
Example 10: tax losses where beneficiary has no interest in trust capital
The XYZ trust has tax losses of earlier income years of $2,000. Its net income is $20,000, excluding losses of earlier income years. There are 2 presently entitled beneficiaries of the trust, each with a 50% interest in the income of the trust. The trust deed requires tax losses to be met out of corpus.
One beneficiary is a life tenant. The other has an interest in the income and the capital of the trust.
In calculating the net income of the trust for the life tenant’s share, no account is taken of earlier year losses. The life tenant’s share of the net income of the trust for tax purposes is 50% of $20,000 which is $10,000.
Conversely, in calculating the other beneficiary’s share of the net income of the trust, earlier year losses are taken into account. That beneficiary’s share of the net income of the trust for tax purposes is 50% of ($20,000 − $2,000) which is $9,000.
End of exampleContinue to: Total net income or loss – item 26
Return to: Instructions to complete the Trust tax return 2024