Non-Commercial Losses for Individuals

Understand the NCL rules that allow individuals to deduct certain tax losses, plus know about key traps & planning opportunities!

In this session, we cover:

• An overview of the non-commercial loss rules

  • What are they?

  • What is the effect?

  • Exceptions to the loss deferral rule

  • Limits to applying the NCL rules

• Only applies to individuals - sole traders and individual partners

• Does the individual carry on a business activity?

  • Identifying a ‘business activity’

  • Grouping similar businesses

• Does the tax loss arise from the business activity?

• Exception for primary production and professional artists

• Income requirement - less than $250,000

• Objective commercial tests

  • Assessable income test

  • Profits test

  • Real property test

  • Other assets test

• Exercise of Commissioner’s discretion to not apply loss deferral rule

  • Special circumstances

  • Business lead time discretion

Date recorded: 22 April 2025