Are costs of starting a business deductible against my personal (non-business) income?

 Author: BlakeATO(Community Support)Community Support

21 Nov 2021

Hi @samdip

It depends. It sounds like you plan on running your business as a sole trader since you've said you want to offset your costs against your salary income.

If your business runs at a loss in the first year, you generally need to defer the loss until the business makes a profit. The only exceptions are when you meet the non-commercial losses rules.

If your business is in primary production or professional arts, and your assessable income is less than $40k, you can offset your losses against other income. Or, if you meet any of the four tests, you can offset your losses against other income.

Keep in mind that business start-up costs for sole traders are deducted evenly across five years. This means even if you can claim it against other income, you'll only be able to claim one-fifth of the cost in the first year.

You can read about the non-commercial losses rules and deductions for start-up costs on our website.