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ChrisR46(Newbie)Newbie
17 June 2023

Hi All,


Just after some clarity how deductions would work if item is purchased via TFN and used in a start up ABN that is operating without a profit.


In short, I am looking to start my own business and thus will be getting an ABN. The new business is not in the same field as I am currently employed via a TFN. For the foreseeable future I will be the only employee of the ABN. I will not be quitting my TFN and thus will have income via it.


For starting the business I would like to fun it my self via the income from my TFN and hence the question.


The expenses I incur in starting and operating the ABN business, can these be claimed as deductions against my total income(in this instance, the single income source TFN) even if the business does not sell or make any money? I estimate that the business potentially will not bring in any income for the next 12 month, and thus will be funded solely from my TFN.


So the expenses of the ABN (pens, PO BOX, laptop, etc) can these all be claimed against the TFN income, or do I need to wait until the ABN generates income and then I can claim those expenses against the ABN's income.

1,479 views
7 replies
1,479 views
7 replies

Most helpful response

Most helpful replyATO Certified Response

Bruce4Tax(Taxicorn)Taxicorn
ATO Certified Response18 June 2023

For the foreseeable future I will be the only employee of the ABN.


You can only be an employee if the ABN belongs to a company or trust.


If ABN is yours, then you are a sole trader - not an employee.



The expenses I incur in starting and operating the ABN business, can these be claimed as deductions against my total income(in this instance, the single income source TFN) even if the business does not sell or make any money?


You need sales of $ 20 K per annum, or pro rata equivalent, in order for losses to be claimed against other income - see non-comm loss rules.


https://www.ato.gov.au/business/non-commercial-losses/


do I need to wait until the ABN generates income and then I can claim those expenses against the ABN's income.


Yes


All replies

Most helpful replyATO Certified Response

Bruce4Tax(Taxicorn)Taxicorn
ATO Certified Response18 June 2023

For the foreseeable future I will be the only employee of the ABN.


You can only be an employee if the ABN belongs to a company or trust.


If ABN is yours, then you are a sole trader - not an employee.



The expenses I incur in starting and operating the ABN business, can these be claimed as deductions against my total income(in this instance, the single income source TFN) even if the business does not sell or make any money?


You need sales of $ 20 K per annum, or pro rata equivalent, in order for losses to be claimed against other income - see non-comm loss rules.


https://www.ato.gov.au/business/non-commercial-losses/


do I need to wait until the ABN generates income and then I can claim those expenses against the ABN's income.


Yes


Liked by Peter_Clyne
ChrisR46(Newbie)Newbie
19 June 2023

Sorry on using the wrong terminology, do you have a link for the $20k figure? Doesn't the non-commercial imply a hobby or recreation? Based on the definition in the "Are you a business?", this most definitely will be classed as a business, however there is start-up costs and time for RND.


Even as non-com, as per the link, https://www.ato.gov.au/business/non-commercial-losses/

it says

  • claim and offset the loss against your other income, such as salary and wages

Does that not mean that as a sole trader, I am able to offset expenses and costs against my other wages? So I will be able to off set the Start-up costs against income from my TFN?



Also as a small business(under $10mil), doesn't the instant asset write off under $150k, apply?

https://www.ato.gov.au/Business/Depreciation-and-capital-expenses-and-allowances/Simpler-depreciation-for-small-business/Instant-asset-write-off/#Eligibility

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