# ATO: Non-commercial business losses - Commissioner's discretion regarding flood, bushfire or COVID-19



## Jack Malarkey (Jan 11, 2016)

From the Australian Taxation Office’s small business newsroom:









Sole trader or a partner in a partnership?


Read on if you have non-commercial losses due to flood, bushfire or COVID-19.




www.ato.gov.au





*Sole trader or a partner in a partnership?*








*12 May 2022*

We understand the past few years have been difficult, with floods, bushfires, and COVID-19 affecting many businesses. We want to help make it easier for businesses impacted by these events, and so have developed a practical compliance guideline (PCG) that may assist. 

We develop PCGs to address the practical implications of tax laws and outline our administrative approach.

Currently you need to defer a loss from a non-commercial business activity (like a hobby) to be offset against future income from that same activity. 

There are some exceptions to this where certain rules in the _Income Tax Assessment Act 1997_ are met, or if the Commissioner of Taxation exercises his discretion to allow you to offset the loss after considering relevant factors.

_Draft PCG 2022/D2 Non-commercial business losses – Commissioner's discretion regarding flood, bushfire or COVID-19 _provides a safe harbour for individuals, including partners in a partnership, who:

made a loss from non-commercial business activities due to flood, bushfire or COVID-19 government restrictions, and
meet the other requirements in the PCG.
If the safe harbour applies to you, you will be able to manage your tax affairs as if the Commissioner had exercised the discretion and offset a loss against your other income. This also means you will not need to apply for a private ruling to seek clarity.

The PCG has examples to help you better understand how the safe harbour can apply in various situations. When finalised, the PCG will apply for the 2019–20, 2020–21 and 2021–22 income years.

Remember, registered tax agents can help with your tax.

*Next step*

If you have any feedback on draft PCG 2022/D2, let us know by 21 June.
*See also*

Non-commercial losses


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