L1 Tax losses of earlier income years 2016

This question is about tax losses from earlier income years for which you may be able to claim a deduction in 2015-16.

Do you have tax losses from earlier income years?

No	Go to Taxable income or loss 2016, or return to main menu Individual tax return instructions 2016.
Yes	Read on.

Do not show at this item:

• capital losses; go to question 18 Capital gains 2016
• expenses and losses in relation to earning foreign source income; go to question 20 Foreign source income and foreign assets or property 2016
• deferred non-commercial business losses from a prior year
  • for partnership activities; go to question 13 Partnerships and trusts 2016
  • for sole trader activities; go to P8 in the Business and professional items instructions 2016.
   

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 2015, or were released from debts under an arrangement entered into under the bankruptcy laws before 1 July 2015, 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 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 2014-15 less the amount of your net exempt income for 2015-16.

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 2016.

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 2015-16, if any (see Amounts that you do not pay tax on 2016 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. 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 2016. 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 2015-16	$			(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 2015-16

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 2016-17. 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 2016-17. Keep a record of it for next year.

You have finished this question. Go to Taxable income or loss 2016.

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 2016-17. Keep a record of it for next year.

You have no primary production losses to carry forward to 2016-17.

You have finished this question. Go to Taxable income or loss 2016.

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 2016-17.

You have finished this question. Go to Taxable income or loss 2016.

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 2016-17 and the non-primary production losses you carry forward to 2016-17.

Make sure you show all 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 2016-17. 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 2016-17. 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 2016-17. 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
2016-17. Keep a record of it for next year.

You have finished this question. Go to Taxable income or loss 2016.

Step 23

The amount at Q is your primary production losses you carry forward to 2016-17.

The amount at R is your non-primary production losses you carry forward to 2016-17.

Keep a record of them for next year.

Where to go next

• Taxable income or loss 2016
• Individual tax return instructions 2016
• Subtotal 2016

This question is about tax losses from earlier income years for which you may be able to claim a deduction this year.