L1 Tax losses of earlier income years 2015

Complete question L1 if you have a tax loss from an earlier year that you may be able to claim a deduction this year.

Last updated 28 May 2015

This question is about tax losses from earlier income years for which you may be able to claim a deduction in 2014–15.

Did you have any of these losses?

No	Go to Taxable income or loss, or return to main menu Individual tax return instructions.
Yes	Read on.

Do not show at this item:

capital losses; go to question 18 Capital gains
expenses and losses in relation to earning foreign source income; go to question 20 Foreign source income and foreign assets or property
deferred non-commercial business losses from a prior year
- for partnership activities; go to question 13 Partnerships and trusts
- for sole trader activities; go to question P8 in Business and professional items 2015 (NAT 2543).

Answering this question

Complete this item if you have a tax loss from an earlier income year which you have not claimed as a deduction

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.

If you became bankrupt before 1 July 2014, or were released from debts under an arrangement entered into under the bankruptcy laws before 1 July 2014, 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 2013–14 less the amount of your net exempt income for 2014–15.

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 2015 (NAT 1712).

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 2014–15, 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).

Worksheet 1
	Total losses	Primary production losses	Non-primary production losses
Total tax losses from earlier years	$			(a)
Primary production losses from earlier years		$		(b)
Non-primary production losses from earlier years			$	(c)
Exempt income for 2014–15	$			(d)
Expenses relating to your exempt income	$			(e)
Net exempt income for this year Take (e) away from (d).	$			(f)
Total prior year losses available for use this year Take (f) away from (a).	$			(g)
Primary production losses available for use Take (f) away from (b).		$		(h)
Non-primary production losses available for use Take (f) away from (c).			$	(i)
You cannot have a negative amount at (h) or (i). The total of (h) and (i) must equal (g).

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 2015–16. 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 2015–16. 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 2015–16. Keep a record of it for next year.

You have no primary production losses to carry forward to 2015–16.

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 2015–16. 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 2015–16 and the non-primary production losses you carry forward to 2015–16.

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.

Worksheet 2
Amount from SUBTOTAL This amount is a loss, show it as a negative amount.	-$	(p)
Amount from item D9 on page 4 of your tax return	$	(q)
Amount from item D12 on page 15 of your tax return	$	(r)
Add (q) and (r).	$	(s)
Add (s) which is either zero or positive to (p) which is negative. If (t) is positive, go to step 23.	$	(t)
Amount from Net primary production distribution item 13 on page 13 your tax return	$	(u)
Amount from B item 15 on page 14 of your tax return	$	(v)
Add (u) and (v).	$	(w)
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)
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 2015–16. 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 2015–16. 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 2015–16. 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 2015–16. Keep a record of it for next year.