Offsetting profit and losses between businesses 043-03100070

George operates two separate businesses, a farm and a yacht charter business.

As the business of a farm would not normally be connected to a yacht charter business, the offsetting of losses would not be allowed in this example.

Sarah runs a marine slipway business that services charter yachts and also runs a yacht charter business. The yachts from the charter business are serviced by using the marine slipway.

The marine slipway business makes an overall loss, while the yacht charter business makes an assessable profit.

Only the portion of the losses of the marine slipway business that relate to the specific yachts serviced from the yacht charter business can be offset against the assessable profit from the yacht charter business. If the marine slipway had serviced 100 yachts, three of which are from the yacht charter business, only the part of the loss relating to the slipway's expense of servicing those three yachts, can be offset against the profit of the yacht charter business.

Bill and Joan own a farm which is held by their family trust. The trust is attributed 50% each to Bill and Joan. Their partnership operates the farming enterprise, and pays lease income to the trust of $10,000, and the trust consequently makes a profit of $10,000. However, the partnership pays the land rates for the property of $2,000 and a loss of $2,000 was distributed to Bill and Joan ($1,000 each). The attribution income is reduced by $1,000 each from the partnership loss; $4,000 each is attributed to Bill and Joan.

Bill and Joan are partners in a farm business which is run on a property which is owned by the family trust that is attributed 100% to Bill. Their partnership operates the farming enterprise, and pays lease income to the trust of $10,000 and the trust consequently makes a profit of $10,000. However, the partnership pays land rates for the property of $2,000 and a loss of $2,000 was distributed to Bill and Joan ($1,000 each). The attribution income to Bill is reduced by $1,000 from Bill's partnership loss, $9,000 is attributed to Bill. Joan's $1,000 loss from the partnership cannot reduce the attributed income as Joan is a non-controller.