Work out how I deal with a tax loss, based on my business structure.

Determine if non-commercial loss rules apply to a loss from my business by reviewing these steps:
1. Am I a sole trader or individual partner in a partnership and am I ‘in business’?
- No: Non-commercial loss rules don’t apply – determine nature of my enterprise and apply relevant requirements.
- Yes: Non-commercial loss rules apply. Go to step 2.

2. Do I have similar business activities that may be grouped together?
- Regardless of answer, go to step 3.

3. Is my business activity an excepted activity?
- Yes: You’re excepted from using non-commercial loss rules. You can deduct your net tax loss from other income in the same business year. You do not apply any other steps in the process.
- No: Go to step 4.

4. Do I meet the income requirement?
- Yes: You will need to consider whether you pass one of the four tests. Go to step 5.  
- No: Are there circumstances that would allow you to apply for the Commissioner’s discretion?
         * Yes, go to step 6.
         * No, the non-commercial loss rules apply and you must defer your tax loss. You can use this loss if you make a profit from the same business or satisfy the non-commercial loss rules in a future income year.

5. Do I pass at least one of the four tests?
- Yes: You can offset your other income with the tax loss from your business activity.
- No: Non-commercial loss rules apply. You must defer your tax loss to the next income year in which you carry on the same business activity unless the Commissioner exercises the discretion to allow you to offset it against your income.

6. Commissioner’s discretion
If the non-commercial loss rules apply, you can apply for the Commissioner’s discretion
- If it is granted you’re excepted from using non-commercial loss rules. You can deduct your loss from the business activity against your other income in the same business year.
- If it is not granted the non-commercial loss rules apply to your loss from the business activity.
You must defer your loss to the next income year in which you carry on the same business activity.

If my business is run by a trust or company, review the rules for claiming a tax loss on the ATO website and seek advice from a registered adviser.