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If you have a loss from 1 or more activities like:

  • running a business
  • making investments
  • a rental property

we will automatically exclude it from your income for Working for Families and student loans.

This means that a loss will not reduce your income for the purposes of working out your Working for Families entitlement or your student loan repayment obligation.

If you've shown the net result in your individual income tax return - IR3

If you've offset a loss or losses against another income and only shown the net result in your IR3, you'll need to tell us the details.

You only need to tell us the amount of a loss if you have both:

  • made a loss and profit from 2 or more unrelated businesses or investment activities
  • entered the net amount in only 1 box on your IR3.

Example 1

Frank has self-employed income from 2 unrelated businesses, a plastering business and a shoe shop. The plastering business made a profit of $30,000, while the shoe shop made a loss of $10,000.

Frank puts the profit of $20,000 in the self-employed income box in his IR3. He would then need to tell us the amount of the loss from the shoe shop ($10,000) so his full gross income can be included for Working for Families and student loans.

Frank's student loan repayment obligation and Working for Families entitlement will then be based on $30,000 of income from the plastering business.

Example 2

Denise has self-employed income from a scrap paper business and a jewellery shop. The scrap paper business made a profit of $25,000, while the jewellery shop made a loss of $30,000.

Denise claimed the net loss of $5,000 in her IR3 return. She only needs to tell us about the portion of the loss that was offset against the scrap paper profit ($25,000) so it is included as part of her income for Working for Families and student loans.

Denise's Working for Families entitlement and student loan repayment obligation will then be based on $25,000 of income from the scrap paper business.

Example 3

Angela's IR3 return shows income from her farming business of $60,000 and a loss from renting out commercial buildings of $25,000.

Angela declares the income and loss in separate boxes in her IR3 - the income from the farming business is declared as as self-employed income, and the loss from renting out commercial income as rental income.

Because they have been declared in separate boxes, Angela doesn't need to tell us to make an adjustment for her loss from renting the commercial buildings. We'll automatically treat the loss as nil.

Her Working for Families entitlement and student loan repayment obligation will be based on the $60,000 of income from her farming business.

Example 4

Sophie's IR3 return shows net income of $55,000 from self-employment made up of $75,000 income from a gardening business and a $20,000 loss from her landscaping business.

Because the 2 businesses are associated, the loss from landscaping can be offset against the income from the gardening business.

Sophie does not need to tell us about the $20,000 loss.