L1 Tax losses of earlier income years 2023

Things you need to know

Complete this question 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 question L1 in 2022–23 which you may be able to claim as a deduction. You have to complete this question whether or not you are able to claim a deduction for the loss in 2022–23.

If you became bankrupt before 1 July 2022, or were released from debts under an arrangement entered into under the bankruptcy laws before 1 July 2022, 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.

Don't include at this question

Do not show at this question:

• capital losses; go to question 18 Capital gains 2023
• expenses and losses in relation to earning foreign source income; go to question 20 Foreign source income and foreign assets or property 2023
• deferred non-commercial business losses from a prior income year
  • for partnership activities; go to question 13 Partnerships and trusts 2023
  • for sole trader activities, go to P8 Business income and expenses in Business and professional items 2023.
   

Do you have tax losses from earlier income years?

No	Go to Taxable income or loss 2023, or return to main menu Individual tax return instructions 2023.
Yes	Read on.

What you need to answer this question

To complete this question, you will need records of your tax losses from earlier income years.

Completing your tax return

The amount of tax losses from earlier income years that you write at question L1 – label Q and R is the amount of tax losses you carried forward from 2021–22 less the amount of your net exempt income for 2022–23.

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 2023.

Part A – Losses carried forward from earlier income years

Use Worksheet 1 to work out what to write at question L1 – label Q and R.

Step 1

Write at row a in Worksheet 1 the total amount of tax losses you have available from earlier income years. Do not include non-primary production losses from 1988–89 or earlier years.

Separate the amount at row a into your losses from primary production and from non-primary production. Write the amounts at rows b and c respectively.

Step 2

Write at row d the total of your exempt income for 2022–23, if any (see Amounts that you do not pay tax on 2023 to find out what amounts are exempt income).

Step 3

Write at row 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 row e away from row d and write the answer at row f. If row e is more than row d, write 0 at row f.

Step 5

If row f is more than row a, you do not have any losses you can claim at this item. Leave question L1 blank and go to Where to go next. Otherwise, take row f away from row a and write the answer at row g.

Step 6

• If you have an amount at row b but not at row c, take row f away from row b and write the answer at row h.
• If you have an amount at row c but not at row b, take row f away from row c and write the answer at row i.
• If you have amounts at both rows b and c, you choose how much of row f to take from each of rows b and c.

Worksheet 1

Row	Calculation	Amount
a	Total tax losses from earlier years	$
b	Primary production losses from earlier years	$
c	Non-primary production losses from earlier years	$
d	Exempt income for 2022–23	$
e	Expenses relating to your 2022–23 exempt income	$
f	Net exempt income for 2022–23. Take row e away from row d.	$
g	Total prior year losses available for use in 2022–23. Take row f away from row a.	$
h	Primary production losses available for use in 2022–23. Take row f away from row b.	$
i	Non-primary production losses available for use in 2022–23. Take row f away from row c.	$

You cannot have a negative amount at rows h or i.

The total of rows h and i must equal row g.

Step 7

Transfer the amount at row h to question L1 – label Q.

Step 8

Transfer the amount at row i to question L1 – label R.

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 2022–23

The following steps will help you work out what to write at question L1 – label F and Z 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 row 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 question L1 – label Q, go to Step 14.

Otherwise, transfer the amount at Subtotal to question L1 – label F.

Step 12

Take the amount at label F away from the amount at label Q. The answer is the amount of primary production losses you carry forward to 2023–24. Keep a record of it for next year.

Step 13

The amount at question L1 – label R is the amount of non-primary production losses you carry forward to 2023–24. Keep a record of it for next year.

You have finished this question. Go to Where to go next.

Step 14

Transfer the amount at question L1 – label Q to question L1 – label F.

Step 15

Take the amount at question L1 – label F away from the amount at Subtotal. Write the answer at question L1 – label Z.

Step 16

Take the amount at question L1 – label Z away from the amount at question L1 – label R.

The answer is the amount of non-primary production losses you carry forward to 2023–24. Keep a record of it for next year.

You have no primary production losses to carry forward to 2023–24.

You have finished this question. Go to Where to go next.

Step 17

Transfer the amount you wrote at question L1 – label Q to question L1 – label F.

Step 18

Transfer the amount you wrote at question L1 – label R to question L1 – label Z.

You have no primary production losses or non-primary production losses to carry forward to 2023–24.

You have finished this question. Go to Where to go next.

Part C – If the amount at Subtotal is a loss

Step 19

If the amount you wrote at Subtotal is a loss, leave question L1 – label F and Z blank.

Step 20

Use Worksheet 2 to work out the primary production losses you carry forward to 2023–24 and the non-primary production losses you carry forward to 2023–24.

Make sure you show all losses as negative amounts in Worksheet 2. Amounts you write at rows t, u, v and w may be losses. If so, show them as negative amounts.

Worksheet 2

Row	Calculation	Amount
p	Amount from Subtotal This amount is a loss, show it as a negative amount.	$
q	Amount from question D9 on page 4 of your tax return	$
r	Amount from question D12 on page 15 of your tax return	$
s	Add rows q and r.	$
t	Add row s, which is either zero or positive to row p which is negative. If row t is positive, go to step 23.	$
u	Amount from question 13 Partnerships and trusts – label Net primary production distribution on page 13 in your supplementary tax return	$
v	Amount from question 15 Net income or loss from business – label B on page 14 in your supplementary tax return	$
w	Add rows u and v.	$
x	If row w is a loss and is the same or a greater loss than row t, write the amount from row t. If row w is a loss and is a smaller loss than row t, write the amount from row w. Otherwise, write 0.	$
y	If row w is a loss and is the same or a greater loss than row t write 0. If row w is a loss and is a smaller loss than row t, take row w away from t and write the answer. If row w is not a loss, write the amount from row t.	$

Step 21

If the amount at row x is zero, then the amount at question L1 – label Q is the amount of primary production losses you carry forward to 2023–24. Keep a record of it for next year.

If the amount at row x is not zero, then add the amount at row x to the amount at question L1 – label Q. 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 2023–24. Keep a record of it for next year.

Step 22

If the amount at row y is zero, then the amount at question L1 – label R is the amount of non-primary production losses you carry forward to 2023–24. Keep a record of it for next year.

If the amount at row y is not zero, then add the amount at row y to the amount at question L1 – label R. 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 2023–24. Keep a record of it for next year.

You have finished this question. Go to Where to go next.

Step 23

The amount at label Q is your primary production losses you carry forward to 2023–24.

The amount at label R is your non-primary production losses you carry forward to 2023–24.

Keep a record of them for next year.

Where to go next

• Go to Taxable income or loss 2023.
• Return to main menu Individual tax return instructions 2023.
• Go back to Subtotal 2023.

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