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Newbie

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Hi, I am just wondering if my company earned no income and there are some expenses occurred such as stationary items, tables, chairs, laptop. Can those expenses be claimed? Please let me know.

 

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Taxicorn

Replies 3

Company or Sole Trader?

 

Any expenses can be claimed, but they will result in a carry forward loss, which will be used either (a) First possible year for sole trader or (b) Whenever you choose for Company.

 

https://www.ato.gov.au/General/Losses/How-to-claim-a-tax-loss/

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Taxicorn

Replies 0

Company or Sole Trader?

 

Best answer

Taxicorn

Replies 3

Company or Sole Trader?

 

Any expenses can be claimed, but they will result in a carry forward loss, which will be used either (a) First possible year for sole trader or (b) Whenever you choose for Company.

 

https://www.ato.gov.au/General/Losses/How-to-claim-a-tax-loss/

Newbie

Replies 2

Im not sure what is sole trader. But i plan to open a small IT company, i guess thats qualified for Company as you mentioned. 

 

What is forward carry loss? Do i have to pay it back in the future? What if my company takes years before generating income and i claim expenses every year?

Taxicorn

Replies 0

You don't need to start a company to create an IT business, most people wouldn't.

 

https://www.traderisk.com.au/sole-trader-or-company

 

Carry forward losses get carried forward until you start earning money and can use them to offset the income:

 

Sole trader:

2017 Income = $100, expenses = $1,100 therefore Loss = -$1,000 ($1,00 gets carried forward until it can be used)

2018 Income = $500, expenses = $2,500 therefore Loss = -$2,000 ($2,00 gets caried forward + add Loss from 2017 meaning carry forward loss is now $-3000)

 

2019 Income = $5,000, expenses = $1,000 so profit = $4,000. Now use carry forward loss of $-3,000 and profit = $1,000.

 

 

ATO Certified

TaxTime Support

Replies 0

Hi @dmngu9,

 

Thanks for your question!

 

@macfanboy has provided some fantastic information, but I'd like to add a little more.

 

Regardless of your chosen business structure, in order to be able to claim your business expenses as a deduction they will need to meet the following rules:

  • The expense must have been for your business, not for private use
  • If the expense is for a mix of business and private use, you can only claim the portion that is used for your business.
  • You must have the records to prove it.

So as long as the expenses you've incurred in setting up the business meet those rules, they should be deductible.

 

If you want to find out more about the different business structures available to you, we have some more information available here.

 

Hope this helps,

 

Rachael B.

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