Announcements
Have you sold crypto, shares or property? Our new capital gains tax guide has info about cost bases, calculations & more! Still got questions? Ask the Community!

ATO Community

Re: loss in online clothing business

This post is archived and may not be up-to-date.

Initiate

Views 1487

Replies 4

Hello,

I started a home based online clothing business as a sole trader in October 2015 and ended up donating all those clothes to Red Cross in August 2017. It was a proper business, I setup an online store, took ABN and business name, bought $8500 worth of clothing from overseas in the intention of gaining profit. But ended up with no sale at all. My taxable income from working at Coles as an employee was $40,000 in that year. Since there is no sale activity, am I still eligible to offset the loss to income or defer it for later? Do I need to record it to MyTax in 2018 tax year to be able to defer in future?

Thanks in advance. 

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

Taxicorn

Replies 2

You can only offset losses if your turnover was $20,000 or greater.

Seeing you made no sales, then you can not offset it now or later.

This loss is not carried forward if you have stopped the business.

 

 

4 REPLIES 4

Initiate

Replies 3

PSI rule do not apply to me as more than 50 percent income would had come from sell.

Most helpful response

Taxicorn

Replies 2

You can only offset losses if your turnover was $20,000 or greater.

Seeing you made no sales, then you can not offset it now or later.

This loss is not carried forward if you have stopped the business.

 

 

Initiate

Replies 1

Ok thanks heaps, good to know that, it was a complete solution to my question.
Now referring to my another post regarding clamming capital loss of property. It was the principle place of residence for 69 months where I operated the online clothing business for 22 months. Do you think my business will be deemed as business given the fact there was no sales? So I can claim portion of the capital loss? Thanks in advance.

Taxicorn

Replies 0

@Barry2 

 

Doesn't work that way sorry.

 

If you Principal Place of residence runs a business, whether it makes money or loses money then there is a capital gain event when you sell the property.

 

This Capital Gain event may end up with a Gain or a Loss.

 

If it is a Gain you pay extra tax, if it is a loss then you can't claim it against normal income only against any Capital Gains that you may have generated after selling an asset like shares, investment properties, cryptocurrency etc.

 

The formulae is basically sold cost - purchase cost x (days run business/days owned property) x (floor area used in business/ total house area) x 50% (as asset was owned more than 12 months) divided by owners.

 

https://www.ato.gov.au/General/Capital-gains-tax/Working-out-your-capital-gain-or-loss/