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Comment: 2018 compliance
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The worksheets for prior year losses are:

  • Prior Year Losses

  • For Individual Returns, refer to Prior Year Losses Worksheet (pyl) ‐ Individuals

  • For Trust Returns, refer to Prior Year Losses Worksheet (pyl) ‐ Trusts

  • For Company Returns, refer to Prior Year Losses worksheet (pyl) ‐ Companies.

For the rules applying to the prior year losses refer to:

Prior Year Losses Worksheet (pyl) - Individuals

These instructions apply to the Individual returns:

How to Complete the Prior Year Losses Worksheet

For each of the years, separate the losses into PP and Non-PP income.

Prior year losses carried forward (by year): Enter the loss relevant to each year and income type.

Total: The total for PP income and NPP income is calculated by the system and integrated to either or both of labels Q and R item L1 in the Individual return (PP or Non-PP losses carried forward from earlier income years).

Less: Net exempt income for the current income year (including exempt foreign income and exempt film losses): For resident Australians net exempt income includes all the taxpayer’s exempt income including exempt foreign employment income.

For non-residents, net exempt income includes all the taxpayer’s exempt income from Australian sources and film income exempt under section 26AG of the ITAA 1936.

In working out exempt income, irrespective of Residency status, deduct any non-capital expenses incurred in earning that exempt income and any foreign tax payable on that income.

Less: Net film losses for the current income year: Film losses are added to the Non-PP column only.

Total prior year loss available to offset current year taxable income: These fields are calculated by the system.

Net Income or Loss per return: These fields are calculated by the system and based upon income or loss, the following field will be open (net income) or closed (net loss).

Prior year losses to be applied to current year income: If the field is open to edit, signifying there is net income in the current year to apply these prior losses again, then a loss amount less than or equal to the net income should be entered which will either reduce or bring the taxable income to NIL. The amount entered here cannot exceed the total prior losses available nor can it exceed the current year taxable income.

The amounts calculated integrate to either or both of labels F and Z at item L1 (PP or Non-PP losses of earlier income years claimed this year) - if the pyl is attached to an Individual return.

Total prior year losses to carry forward: These figures are calculated by Tax and represent the Prior year losses remaining at the end of the year to be carried forward to the next year.

Prior Year Losses Worksheet (pyl) - Trusts

How to Complete the Prior Year Losses Worksheet

For each of the years, separate the losses into PP and Non-PP income.

Prior year losses carried forward (by year): Enter the loss relevant to each year and income type.

Total: The total for PP income and NPP income is calculated by the system.

Less: Net exempt income for the current income year (including exempt foreign income and exempt film losses): For resident Australians net exempt income includes all the taxpayer's exempt income including exempt foreign employment income.

For non-residents, net exempt income includes all the taxpayer's exempt income from Australian sources and film income exempt under section 26AG of the ITAA 1936.

In working out exempt income, irrespective of Residency status, deduct any non-capital expenses incurred in earning that exempt income and any foreign tax payable on that income.

Less: Net film losses for the current income year: Film losses are added to the Non-PP column only.

Total prior year loss available to offset current year taxable income: These fields are calculated by the system.

Net Income or Loss per return: These fields are calculated by the system and based upon income or loss, the following field will be open (net income) or closed (net loss).

Prior year losses to be applied to current year income: Enter the amount required to either reduce or bring the taxable income to NIL. The amount entered here cannot exceed the total prior losses available nor can it exceed the current year taxable income.

The amounts integrate to:

Total prior year losses: These are the remaining losses to be carried forward after applying losses to the current year income.

Current year loss: This is the sum of PP and Non-PP losses as an aggregated figure which will be the amount that you will include in the Losses schedule BP if you are required to lodge the Losses schedule.

Add Uplift of tax losses of designated infrastructure project entities: Enter the amount of any such loss at this field. This is the amount that you should enter at Section F in the losses schedule if you are required to lodge the Losses schedule.

Total losses to carry forward at the end of the year: This amount is calculated by Tax and represent the losses remaining at the end of the year to be carried forward to the next year. This amount integrates to Item 27 label U Losses information (Tax losses carried forward to later income years).

Integration to the main return

Integration to the main return may be from 2 sources - the pyl worksheet and the ATO Losses Schedule BP. Complete the pyl worksheet first so that item in the main return is completed. Then if required, complete the ATO Losses Schedule BP so that final integration to the main return will be from the BP.

Prior Year Losses worksheet (pyl) - Companies

This worksheet and instructions apply to Company returns only.

Click item 13 label U to open the Prior Year Losses worksheet in the Company return, or select it from PreparationSchedule > Prior year losses worksheet.

The fields are self-explanatory and those that are greyed out are the ones auto-calculated by Tax.

Losses to carry forward that cannot be applied in the current year

Current Year Loss: This amount is defaulted from the taxable income (loss) amount calculated in the tax return.

Add: Uplift of tax losses of designated infrastructure project entities: The amount entered in this field will be integrated to the Reconciliation statement Part F of the Losses Schedule (BP).

Less: Net exempt income for 20162017-1718: Enter any amount of exempt income from the 20162017-17 year 18 year that is used to reduce the current year loss.

Add: Deemed loss from excess franking credits (item 8H): This amount is calculated by Tax from the value entered at label H Excess franking offsets item 8 and is converted to a current year loss to carry forward to the subsequent year as the amount of excess credit entered divided by 30 or 27.5% if the company is a small business base rate entity. This amount may not be used to offset taxable income in the current year.

Current year losses remaining: This is the sum of the three previous fields.

Prior year losses carried forward (by year)

The PYL worksheet is laid out so that all losses for prior years may be entered in the year in which they were incurred because losses must be applied in the order in which they occurred, that is from earliest to latest.

Total: This is the total of all the prior year losses.

Deductions:

Net exempt income from all sources 20162017-1718: Enter the relevant amount.

Tax losses forgone: Enter any tax losses that the company has forgone in the current year.

Net forgiven amount of debt: Enter the total amount of all debts forgiven by the company during the year.

Tax Losses transferred out under subdivision 170A: Enter the total amount of all losses transferred out that fall within sub-division 170A.

Total: This is the total of the previous 5 fields.

Summary:

The bottom half of the prior year losses worksheet for Companies shows how the final prior year loss amount available to be used to offset current year income is arrived at.

Total prior year loss available to offset 20162017-17 18 Net Income: This is the sum of the Total Prior year losses carried forward by year less the Total Deductions.

Net income per return: This amount is defaulted from Net income shown at item 7 in the Company return.

Prior year losses to be applied to current year income (Losses applied cannot exceed Net Income): This amount cannot be greater than the amount available to offset. This amount integrates to Tax losses deducted, at subtraction Item 7 label R.

Total losses to carry forward at the end of the year: This amount is calculated by Tax and integrates to Item 13 label U. At the same time, the amounts are passed to the relevant ATO Losses Schedule – BP for Unconsolidated Entities and BX for Consolidated Groups.

Rolling over losses from one year to the next

When the worksheet is rolled over to the next income year the losses are recalculated to reflect those used or made in the previous year. Tax deducts against the earliest loss recorded in the worksheet and continues through the years until each year’s loss is extinguished. Any unrecouped amount is rolled into the same year in the next year’s prior year losses worksheet.

If during the Retain Schedule Data (RSD) process you elect not to roll-over schedules, then these balances will be lost.

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Because integration to the main return is from 2 different sources – the pyl worksheet and the ATO Losses Schedule, it is important that both agree because whichever of the two is last opened will control the amount that is integrated to the main return.

Prior year losses worksheet (pyl) - FUND & SMSF

This worksheet and instructions apply to Fund and SMSF returns only.

To open the prior year losses worksheet in the:

Integration to the main return

Integration to the main return may be from 2 sources – the pyl worksheet and the ATO Losses Schedule BP. Complete the pyl worksheet first so that item in the main return is completed. Then complete the ATO Losses Schedule BP so that final integration to the main return will be from the BP.

How to Complete the Prior Year Losses Worksheet

If the Prior year foreign losses conversion worksheet has been completed relevant fields will be pre-filled with values from that worksheet.

The fields are self-explanatory and those that are greyed out are the ones auto-calculated by Tax.

Losses to carry forward that cannot be applied in the current year

Current Year Loss: This amount is defaulted from the taxable income/(loss) calculated in the tax return.

Less: Net exempt income for 20162017-1718: Enter any amount of exempt income from the 20162017-17 year 18 year that is used to reduce the current year loss.

Current year losses remaining after offsetting foreign exempt income: This is the sum of the three previous fields.

Prior year losses carried forward (by year)

The PYL worksheet is laid out so that all losses for prior years may be entered in the year in which they were incurred.

Total: This is the total of all the prior year losses.

Deductions:

Net exempt income from all sources: Enter the relevant amount.

Summary:

The bottom half of the prior year losses worksheet for Companies shows how the final prior year loss amount available to be used to offset current year income is arrived at.

Total prior year loss available to offset 20162017-17 18 Net Income: This is the sum of the Total Prior year losses carried forward by year less the Total Deductions.

Net income per return: This amount is defaulted from Net income amount at item 11 label O in the Fund return or 12 label O in the Self-managed superannuation fund.

Prior year losses to be applied to current year income (Losses applied cannot exceed Net Income: This amount cannot be greater than the amount available to offset. This amount integrates to Tax losses deducted at:

Total losses to carry forward at the end of the year: This amount is calculated by Tax and integrates to:

Rolling over losses from one year to the next

When the worksheet is rolled over to the next income year the losses are recalculated to reflect those used or made in the previous year. Tax deducts against the earliest loss recorded in the worksheet and continues through the years until each year’s loss is extinguished. Any unrecouped amount is rolled into the same year in the next year’s prior year losses worksheet.

If during the Retain Schedule Data (RSD) process you elect not to roll-over schedules, then these balances will be lost.

Back to Prior year losses worksheet (pyl)

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(AE and Series 6 & 8) Retain Schedule Data (RSD) Options

Form C, Item 7 - Label R-Tax losses deducted

Form F, Item 11 Label M-Tax losses deducted

Form MS, Item 12 Label M1-Tax losses deducted

Form C, Item 13-Losses information

Losses schedule (BP)

Consolidated Groups Losses Schedule (BX)