What are the non-commercial loss rules?

qandaAnd why do I need to know them?

Have you been in the situation where you’re working at your job, and you start a business on the side, you make a loss in that business and your accountant tells you that you can’t claim it?

This may be because you don’t meet the non-commercial loss rules.

The rules were introduced to ensure that only genuine business operators benefit from any losses they incur, and provided a counter-act to the number of taxpayers who were operating “hobbies” but  trying to claim them as a business.

If you make a loss in your business operation (this is any business, not just a part time business as I referred to above), there are some questions that need answering in order to determine if the loss is claimable in the relevant year, or does it need to be carried forward.

Each of the questions to be asked must be applied to the specific circumstances, and so I won’t go into them here – safe to say, if you run a business and have incurred a loss for the year, get The Tax Chic to help you determine if the ATO will consider it a commercial or non-commercial loss!



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