Document ID: chunk:federal_register_of_legislation:C2004A00684:clause:1_3:p1
Version: federal_register_of_legislation:C2004A00684
Segment Type: clause
Provision Reference: sch 1 cl 3 (pt 1/5)
Character Range: 1889–4789

3  Section 34‑65 (link note)
Repeal the link note, substitute:

Division 35—Deferral of losses from non‑commercial business activities

Guide to Division 35

35‑1  What this Division is about

      This Division prevents losses of individuals from non‑commercial business activities being offset against other assessable income in the year the loss is incurred. The loss is deferred.
      It sets out a series of tests to determine whether a business activity is treated as being non‑commercial.
      The deferred losses may be offset in later years against profits from the activity or, if one of the tests is satisfied or the Commissioner exercises a discretion, against other income.

     Table of sections

Operative provisions

35‑5 Object
35‑10 Deferral of deductions from non‑commercial business activities
35‑15 Modification if you have exempt income
35‑20 Modification if you become bankrupt
35‑25 Application of Division to certain partnerships
35‑30 Assessable income test
35‑35 Profits test
35‑40 Real property test
35‑45 Other assets test
35‑50 Apportionment
35‑55 Commissioner's discretion

[This is the end of the Guide.]

Operative provisions

35‑5  Object

 (1) The object of this Division is to improve the integrity of the taxation system by preventing losses from non‑commercial activities that are carried on as *businesses by individuals (alone or in partnership) being offset against other assessable income.

 (2) This Division is not intended to apply to activities that do not constitute carrying on a *business, for example, the receipt of income from passive investments.

35‑10  Deferral of deductions from non‑commercial business activities

 (1) The rule in subsection (2) applies for an income year to each *business activity you carried on in that year if you are an individual, either alone or in partnership (whether or not some other entity is a member of the partnership), unless:
 (a) one of the tests set out in section 35‑30 (assessable income test), 35‑35 (profits test), 35‑40 (real property test) or 35‑45 (other assets test) is satisfied for the business activity for that year; or
 (b) the Commissioner has exercised the discretion set out in section 35‑55 for the business activity for that year; or
 (c) the exception in subsection (4) applies for that year.

Note: This section covers individuals carrying on a business activity as partners, but not individuals merely in receipt of income jointly. Compare the definition of partnership in subsection 995‑1(1).

Rule

 (2) If the amounts attributable to the *business activity for that income year that you could otherwise deduct under this Act for that year exceed your assessable income (if any) from the business activity for that year, or your share of it, this Act applies to you as if the excess:
 (a) were not incurred in that income year; and
 (b) were an amount attributable to the