What do the changes in the budget for tax deductions for non-profitable ventures cover?

Q.

In the recent budget the government changed tax deductions for non-profitable ventures for people with incomes over $250,000. Does this just apply to examples mentioned, such as hobby farms, or does it extend to people with holiday homes and negatively geared investment units where the income does not cover the costs, such as interest and depreciation? If so, it's a nasty change at a bad time for a lot of people.

In general, pre-establishment costs are not allowed for those accessing the non-commercial losses rules currently. That said, there is a provision in the tax law that allows a five year write-off for certain pre-business expenses (the 'blackholes' provisions). When those provisions were introduced in 2006, the Government included a Commissioner's discretion to allow people who were using the non-commercial losses provisions to deduct certain establishment (ie 'blackhole') expenditure against their current wage and salary income. The measure description in the Budget states -Taxpayers will still have the ability to apply to the Commissioner of Taxation for relief from the [new adjusted taxable income] rules if there are exceptional circumstances or because the nature of the activities means that a taxpayer is temporarily carrying on an uncommercial business but the activities they are undertaking are nonetheless independently assessed as commercially viable. The upshot is, that if you currently has the benefit of a Commissioner's discretion, and that discretion carries over into the new rules, then you should be OK.