I already talked over the phone with your colleague at ATO Business Line [removed by moderator] a couple of weeks ago in relation to the incorrect 'Non-Commercial Losses Threshold' error message on My.Gov Tax return.
As an example:
- My full time PAGY salary: $165k (Tax withheld $49k - this line is pre-filled by the employer).
- Business activity loss: $104k (this is not included in the above salary of $165k).
Therefore, the Taxable Income is $61k (as calculated and shown at the end of My.Gov return).
However, when I clicked on 'Calculate Tax ESTIMATE', it asked me to Fix the following errors: Non-commercial losses must be less than non-commercial loss threshold.
When I rang up ATO about this error message, I was told that I had to add the business loss $104k to my salary $165k, which would total to $269k (which is higher than the $250k non-commercial loss threshold and which explains why the above error message is displayed). I honestly don't think it is fair to report $269k as income when I did not earn this much.
Reading the ATO page: https://www.ato.gov.au/business/non-commercial-losses/the-income-requirement/ and follow the Taxable Income Calculation Example therein, I don't think I was given accurate information in that phone call and it is why I am emailing this query again. Based on the example given on the ATO page, my Taxable Income for the purpose of the income requirement test should be $165k (taxable income $61k and add back the business loss $104k OR another way of calculating it is just ignore the business activity loss). $165k is below the $250k threshold and thus, the above error message should not be displayed.
Therefore, I would be very much appreciated if you would please help me to finish off my online return, as currently it doesn't let me go any further due to the highlighted error at the top that asks me to Fix the following errors: Non-commercial losses must be less than non-commercial loss threshold. I was told in that phone call that I should enter a LOSS-CODE number 8 to defer the entire loss because I don't pass the income requirement test. However, from what I explained above, I believe that I do pass the income requirement test and also pass 1 of the 4 tests in the next step, which will then allow me to offset my business loss against my salary in this current year 2022/2023.
I look forward to hearing your response. Thank you.
Kind Regards,
jla
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