This question is about tax losses from earlier income years for which you may be able to claim a deduction in 2010-11.
Did you have any of these losses? |
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No |
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Yes |
Read below |
Do not show at this item capital losses, expenses and losses in relation to earning foreign source income, and deferred non-commercial business losses from a prior year. Refer to TaxPack 2011 supplement if you have any of the following:
- capital losses - see question 18 Capital gains
- expenses and losses in relation to earning foreign source income - see question 20 Foreign source income and foreign assets or property
- deferred non-commercial business losses from a prior year
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- for partnership activities - see question 13 Partnerships and trusts
- for sole trader activities - see question P8 in Business and professional items 2011 (NAT 2543).
Answering this question
Complete this item if either of the following apply:
- you have a tax loss from an earlier income year which you have not claimed as a deduction
- you had foreign losses in the 1998-99 to 2007-08 income years which you have not claimed as a deduction.
In either case, you may have a tax loss at item L1 this year which you may be able to claim as a deduction. You have to complete this item whether or not you are able to claim a deduction for the loss this year.
You will need to go to www.ato.gov.au or to e-tax to work out the amount of your tax losses to complete item L1 if any of the following apply:
- you had foreign losses in the 1998-99 to 2007-08 income years which you have not claimed as a deduction in a previous income year
- you showed a loss at TAXABLE INCOME OR LOSS on your 2010 tax return and you are a foreign resident and have exempt income from Australian sources or exempt film income.
If you became bankrupt before 1 July 2010, or were released from debts under an arrangement entered into under the bankruptcy laws before 1 July 2010, you generally cannot claim a deduction for tax losses incurred before you became bankrupt or were released from the debts.
If you have tax losses from more than one earlier income year you should generally deduct the earliest losses first.
To complete this item on your tax return you will need records of your tax losses from earlier income years.
Completing your tax return
The amount of tax losses from earlier years that you write at Q and R item L1 is the amount of tax losses you carried forward from 2009-10 less the amount of your net exempt income for 2010-11.
You need to separate your losses into primary production losses and non-primary production losses. Primary production activities are described in Information for primary producers 2011 (NAT 1712) which is available on our website at www.ato.gov.au
Part A - Losses carried forward from earlier income years
Use worksheet 1 to work out what to write at Q and R item L1.
Step 1
Write at (a) in worksheet 1 the total amount of tax losses you have available from earlier years. Do not include non-primary production losses from 1988-89 or earlier years.
Separate the amount at (a) into your losses from primary production and from non-primary production. Write the amounts at (b) and (c) respectively.
Step 2
Write at (d) the total of your exempt income for 2010-11, if any (see Amounts that you do not pay tax on to find out what amounts are exempt income).
Step 3
Write at (e) the total expenses (other than capital expenses) incurred in earning your exempt income. This amount should also include any foreign tax payable on your exempt income.
Step 4
Take (e) away from (d) and write the answer at (f). If (e) is more than (d), write 0 at (f).
Step 5
If (f) is more than (a), you do not have any losses you can claim at this item. Leave item L1 blank and go to Taxable income or loss. Otherwise, take (f) away from (a) and write the answer at (g).
Step 6
- If you have an amount at (b) but not at (c), take (f) away from (b) and write the answer at (h).
- If you have an amount at (c) but not at (b), take (f) away from (c) and write the answer at (i).
- If you have amounts at both (b) and (c), you choose how much of (f) to take from each of (b) and (c).
You cannot have a negative amount at (h) or (i), and the total of (h) and (i) must equal (g).
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Worksheet 1 |
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Total losses |
Primary production losses |
Non-primary production losses |
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Total tax losses from earlier years |
$ |
(a) |
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Primary production losses from earlier years |
$ |
(b) |
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Non-primary production losses from earlier years |
$ |
(c) |
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Exempt income for 2010-11 |
$ |
(d) |
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Expenses relating to your exempt income |
$ |
(e) |
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Net exempt income for this year Take (e) away from (d). |
$ |
(f) |
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Total prior year losses available for use this year Take (f) away from (a). |
$ |
(g) |
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Take (f) away from (b) (primary production losses available for use). Take (f) away from (c) (non-primary production losses available for use). |
$ |
(h) |
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$ |
(i) |
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You cannot have a negative amount at (h) or (i). The total of (h) and (i) must equal (g). |
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Step 7
Transfer the amount at (h) to Q item L1.
Step 8
Transfer the amount at (i) to R item L1.
Step 9
If the amount at SUBTOTAL on page 4 of your tax return is a loss, go to step 19. Otherwise, read on.
Part B - Losses claimed in this income year
The following steps will help you work out what to write at F and Z at item L1 if the amount at SUBTOTAL is not a loss.
Step 10
If the amount at SUBTOTAL is more than or equal to the amount at (g) in worksheet 1, go to step 17. Otherwise, read on.
Step 11
If the amount at SUBTOTAL is more than or equal to the amount at Q item L1, go to step 14.
Otherwise, transfer the amount at SUBTOTAL to F item L1.
Step 12
Take the amount at F away from the amount at Q item L1.
The answer is the amount of primary production losses you carry forward to 2011-12. Keep a record of it for next year.
Step 13
The amount at R item L1 is the amount of non-primary production losses you carry forward to 2011-12. Keep a record of it for next year.
You have now finished this question. Go to Taxable income or loss.
Step 14
Transfer the amount at Q item L1 to F item L1.
Step 15
Take the amount at F item L1 away from the amount at SUBTOTAL. Write the answer at Z item L1.
Step 16
Take the amount at Z item L1 away from the amount at R item L1.
The answer is the amount of non-primary production losses you carry forward to 2011-12. Keep a record of it for next year.
You have no primary production losses to carry forward to 2011-12.
You have finished this question. Go to Taxable income or loss.
Step 17
Transfer the amount you wrote at Q item L1 to F item L1.
Step 18
Transfer the amount you wrote at R item L1 to Z item L1.
You have no primary production losses or non-primary production losses to carry forward to 2011-12. You have finished this question. Go to Taxable income or loss.
Part C - If the amount at SUBTOTAL is a loss
Step 19
If the amount you wrote at SUBTOTAL is a loss leave F and Z at item L1 blank.
Step 20
Use worksheet 2 to work out the primary production losses you carry forward to 2011-12 and the non-primary production losses you carry forward to 2011-12.
Make sure you show any losses as negative amounts in worksheet 2. Amounts you write at (t), (u), (v) and (w) may be losses. If so, show them as negative amounts.
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Worksheet 2 |
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Amount from SUBTOTAL This amount is a loss, show it as a negative amount. |
-$ |
(p) |
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Amount from item D9 on page 4 of your tax return |
$ |
(q) |
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Amount from item D14 on page 15 of your tax return (supplementary section) |
$ |
(r) |
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Add (q) and (r). |
$ |
(s) |
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Add (s) which is either zero or positive to (p) which is negative. If (t) is positive, go to step 23. |
$ |
(t) |
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Amount from Net primary production distribution item 13 on page 13 of your tax return (supplementary section) |
$ |
(u) |
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Amount from B item 15 on page 14 of your tax return (supplementary section) |
$ |
(v) |
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Add (u) and (v). |
$ |
(w) |
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If (w) is a loss and is the same or a greater loss than (t), write the amount from (t) at (x). If (w) is a loss and is a smaller loss than (t), write the amount from (w) at (x). Otherwise, write 0 at (x). |
$ |
(x) |
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If (w) is a loss and is the same or a greater loss than (t) write 0 at (y). If (w) is a loss and is a smaller loss than (t), take (w) away from (t) and write the answer at (y). If (w) is not a loss, write the amount from (t) at (y). |
$ |
(y) |
Step 21
If the amount at (x) is zero, then the amount at Q item L1 is the amount of primary production losses you carry forward to 2010-11. Keep a record of it for next year.
If the amount at (x) is not zero, then add the amount at (x) to the amount at Q item L1. When adding these two amounts ignore the fact that they are both negative amounts. The answer is the amount of primary production losses you carry forward to 2010-11. Keep a record of it for next year.
Step 22
If the amount at (y) is zero, then the amount at R item L1 is the amount of non-primary production losses you carry forward to 2010-11. Keep a record of it for next year.
If the amount at (y) is not zero, then add the amount at (y) to the amount at R item L1. When adding these two amounts ignore the fact that they are both negative amounts. The answer is the amount of non-primary production losses you carry forward to 2010-11. Keep a record of it for next year.
You have finished this question. Go to Taxable income or loss.
Step 23
The amount at Q is your primary production losses you carry forward to 2010-11.
The amount at R is your non-primary production losses you carry forward to 2010-11.
Keep a record of them for next year.
Where to go next
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