Private ruling: Lodgment of income tax returns
Published: March 2014
Ruling period: Year ending 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Does the word 'loss' in the ATO publication refer to income loss, business loss or capital loss? | A1: ATO publications regarding whether an income tax return is required to be furnished are based on the requirements set out in the Legislative Instrument for the particular year. The "losses" that are referred to in paragraph 2 of Table A the 2013 Legislative Instrument is any type of tax loss that affects the taxpayer's taxable income so therefore includes a capital loss, business loss, investment loss etc. | Q2: Given the capital gains tax events that transpired in the 2013 financial year, are you required to lodge a 2013 income tax return despite the fact you are under the tax free threshold? | A2: Based on the types of income you have derived and the fact your taxable income is less than $18,200, you are not required to lodge an income tax return for the 2013 income year. | Q3: Would the answer to question 2 be altered if you made a further capital loss? | A3: If your net capital gain for the income year was in fact a net capital loss for the income year then you would be required to lodge an income tax return. | Q4: Would the answer to question 2 be altered if you did not have any capital gains tax events, however still had a carried forward loss from prior income tax years? | A4: If you have no capital gains tax events and are only carrying forward a loss from prior income tax years and you are not applying any of that carry forward loss to your taxable income in an income year, then you would not be required to lodge an income tax return based on the 2013 Legislative Instrument.

Relevant facts and circumstances: • Your taxable income for the 2013 income year is $X. • Your taxable income is comprised of franked dividends of $Y and imputation credits of $Z. • In your 2012 income tax return you included a carried forward capital loss of $S. • In the 2013 income year your carried forward loss was reduced as a result of a net gain of $T (gross current year gain of $U less current year loss of $V). • You did not have any business income or losses.

Relevant legislative provisions: Income Tax Assessment Act 1936 section 161.

Reasons for decision: Summary: ATO publications regarding whether an income tax return is required to be furnished are based on the requirements set out in the Legislative Instrument for the particular year. The "losses" that are referred to in paragraph 2 of Table A the 2013 Legislative Instrument is any type of tax loss that affects the taxpayer's taxable income so therefore includes a capital loss, business loss, investment loss etc. | Detailed Reasoning - Detailed reasoning: Subsection 161(1) of the Income Tax Assessment Act 1936 (ITAA 1936) provides that; Every person must, if required by the Commissioner by notice published in the Gazette, give to the Commissioner a return for the year of income within the period specified in the notice. The Gazette in which the notice is published has been replaced by a Legislative Instrument. The Legislative Instrument "Lodgment of returns for the year of income ended 30 June 2013 in accordance with the Income Tax Assessment Act 1936 , the Income Tax Assessment Act 1997, the Taxation Administration Act 1953, the Superannuation Industry (Supervision) Act 1993 and the Income Tax (Transitional Provisions) Act 1997 (F2013L00925)" (Legislative Instrument) governs the lodgment of income tax returns for the 2013 income year. The Legislative Instrument contains various tables and each table provides different types of income and whether a taxpayer is required to lodge an income tax return if he has derived that income. ATO publications regarding whether an income tax return is required to be furnished are based on the requirements set out in the Legislative Instrument for the particular year. Paragraph 2 of Table A of the 2013 Legislative Instrument provides the following in regard to requirement to lodge a return if you have incurred a loss; incurred a tax loss or made a net capital loss or is entitled to deduct a tax loss or apply a net capital loss of an earlier year of income, or being a company or trust estate has undeducted tax losses or unapplied net capital losses of any earlier year of income where those losses exceed $1,000 or, being a company, transfers a tax loss or net capital loss to another group company; Therefore the Commissioner requires an income tax return to be lodged for an individual where it has either (a) incurred a tax loss or (b) is entitled to deduct a tax loss or (c) applies a net capital loss of an earlier year. The "losses" that are referred to in paragraph 2 of Table A the 2013 Legislative Instrument is any type of tax loss that affects the taxpayer's taxable income so therefore includes a capital loss, business income loss, investment income loss etc. | Summary: Based on the types of income you have derived and the fact your taxable income is less than $18,200, you are not required to lodge an income tax return for the 2013 income year. | Detailed Reasoning - Detailed reasoning: Income derived by you in the 2013 income year is comprised of; Franked dividends - $Y Imputation credits - $Z Net capital gain - $T As stated above paragraph 2 of Table A of the 2013 Legislative Instrument requires an income tax return to be lodged where you have; incurred a tax loss or made a net capital loss or is entitled to deduct a tax loss or apply a net capital loss of an earlier year of income, or being a company or trust estate has undeducted tax losses or unapplied net capital losses of any earlier year of income where those losses exceed $1,000 or, being a company, transfers a tax loss or net capital loss to another group company; In the 2013 income year you have not incurred a loss, nor deducted a loss or applied a loss of an earlier income year. You have made a net gain of $T. You have then applied this gain to reduce your carried forward loss. However, as this loss is merely being carried forward in the 2013 income year (and not being applied to reduce your taxable income) you are not required to lodge a return based on Paragraph 2 of Table of the 2013 Legislative Instrument. If you were to actually incur a loss, deduct a loss or apply a loss of an earlier year then you would be required to lodge an income tax return for that year. As your dividend and imputation credit income has not exceeded $18,200 (paragraph 13 of Table A of 2013 Legislative Instrument) and your taxable income has not exceeded $18,200 (Table C of 2013 Legislative Instrument) you are not required to lodge an income tax return for the 2013 income year. | Summary: If your net capital gain for the income year was in fact a net capital loss for the income year then you would be required to lodge an income tax return. | Detailed Reasoning - Detailed reasoning: As per paragraph 2 of Table A of the 2013 Legislative Instrument an individual taxpayer is required to lodge a tax return where he; • incurs a tax loss; • deducts a loss; or • applies a net capital loss of an earlier income year. If your net capital gain for the income year was in fact a net capital loss for the income year then you would be required to lodge an income tax return. | Summary: If you have no capital gains tax events and are only carrying forward a loss from prior income tax years and you are not applying any of that carry forward loss to your taxable income in an income year, then you would not be required to lodge an income tax return based on the 2013 Legislative Instrument. | Detailed Reasoning - Detailed reasoning: As per paragraph 2 of Table A of the 2013 Legislative Instrument an individual taxpayer is required to lodge a tax return where he; • incurs a tax loss; • deducts a loss; or • applies a net capital loss of an earlier income year. If you are only carrying a loss forward and you are not applying any of that carry forward loss to your taxable income for the year then you would not be required to lodge an income tax return provided your other income earning activities do not require you to lodge an income tax return based on the 2013 Legislative Instrument. As proposed in your question, assuming there are no capital gain events, and your only income is $X of franked dividends and $Y of imputation credits then you would not be required to lodge an income tax return in the 2013 income year.