How to claim a tax loss the right way

Generally, you make a tax loss when your business expenses are more than your income. Or more specifically, when your total deductions are more than your total assessable and net exempt income for an income year.

If you make a tax loss, you may be able to:

  • claim it in the current year

  • carry it forward, or

  • carry it back.

Before you claim a tax loss, check that you’ve correctly:

  • accounted for all your business income

  • claimed expenses such as cost of goods sold, motor vehicle and ‘all other’ expenses

  • apportioned expenses that have been a mix of business and private use

  • applied your loss to the right year.

Don’t forget:

  • A capital loss is different to a tax loss ̶ it can only be offset against future capital gains but not against income.

  • If you’re claiming a tax loss from a previous year and your business is a company, you may need to meet requirements such as the ‘similar business test’.

  • Accurate and up-to-date records will help you better calculate income and expenses.

A registered tax agent can help if you need more information about managing tax losses. Call us on . 

Source: ATO September 2021
Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/Newsroom/smallbusiness/General/How-to-claim-a-tax-loss-the-right-way/
.

Important:
This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person. 

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

The post How to claim a tax loss the right way appeared first on FPG Independent Social & Individual Website Feeds.

Recent stories

UGC Monthly Market Update | February 2024

Welcome to the UGC’s Monthly Market Update for February 2024. Join UGC’s CEO & Chief Investment Officer, Joel Hewish, as…

Read more

How to Make the Most of the Stage 3 Tax Cuts

The introduction of stage 3 tax cuts represents a great opportunity for Australians to enhance their financial well-being. With 13.6…

Read more

Investing for a House Deposit

In today’s economic landscape, purchasing a home is a significant milestone that requires careful financial planning and strategic saving. For…

Read more

The Power of Dollar Cost Averaging in Building Wealth

In the realm of investment strategies, Dollar Cost Averaging (DCA) stands out for its simplicity and effectiveness, particularly for those…

Read more

Understanding the ASX 200: A Key Indicator for Investors

The ASX 200 is more than just a number—it’s a vital indicator of the Australian share market’s health and a…

Read more