Article:

LexisNexis Australian Tax Law Bulletin 2.5
"Division 35 non-commercial losses — one tax rule for those whose taxable income is under $250,000 and no tax rule for those whose taxable income equals or exceeds $250,000 
Part I of II: the application of Div 35 to individuals whose adjusted income equals or exceeds $250,000"


Counsel for the taxpayer in HVZZ

Division 35, within the
Income Tax Assessment Act 1997 (Cth) (the 1997 Act) was inserted into the 1997 Act in 2000 with the intention of placing restrictions on the ability of individuals and partnerships who carried out businesses to deduct business losses against their other income where those business losses were considered too hobby-like in nature. As originally inserted into the 1997 Act in 2000, there were four “commerciality” tests prescribed, one or more of which needed to be satisfied before a taxpayer could apply the losses from their “business activity” against other income. Broadly, if none of the four commerciality tests were satisfied, tax losses generated by a business activity were quarantined and were not available for use until such time as that same business activity generated a profit.

Read more at:
  • LexisNexis Australian Tax Law Bulletin, "Division 35 non-commercial losses — one tax rule for those whose taxable income is under $250,000 and no tax rule for those whose taxable income equals or exceeds $250,000 | Part I of II: the application of Div 35 to individuals whose adjusted income equals or exceeds $250,000", July 2015.