Deductibility of prior year loss when taxpayer was a non resident in the loss year

Is a resident taxpayer entitled to a deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997) for a tax loss from a prior year when the taxpayer was a non resident?

Yes. A resident taxpayer is entitled to a deduction under section 8-1 of the ITAA 1997 for a tax loss from a prior year when the taxpayer was a non resident.

The taxpayer is a resident of Australia for tax purposes in the current year of income.

The taxpayer was a non resident in the immediate prior income year.

While a non resident the taxpayer owned a rental property in Australia after the 1997 year of income.

The rental property incurred a tax loss in the immediate prior income year.

Section 8-1 of the ITAA 1997 allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income.

Section 12-5 of the ITAA 1997 contains a list of provisions about specific types of deductions. Contained in this list is Division 36 with regard to tax losses from earlier income years.

A tax loss is calculated under section 36-10 of the ITAA 1997.

Section 36-15 of the ITAA 1997 allows a tax loss for a loss year to be deducted in a later income year in the manner provided by that section. If there is no net exempt income and the taxpayer's total assessable income exceeds their total deductions (other than the tax loss) the tax loss is deducted from that excess.

The taxpayer is entitled to a deduction under section 8-1 of the ITAA 1997 for a tax loss carried forward from the earlier income year in the manner provided in section 36-15 of the ITAA 1997.