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Claiming A Tax Loss For Your Business Accurately

Are you having a tax loss that you want to claim? If yes, make sure you have accurately calculated the expenses you are entitled to before claiming. Even a minor error of over claiming can put your business on a risk of falling into an incorrect tax loss situation.

To prevent being falling victim to tax audits by the Australian Tax Office, it’s important to apportion or list your expenses correctly. Make sure to claim the expenses of the business portion only. Keep the record of personal transactions and expenses aside. This will avoid any circumstances of mixing both expenses that can result in an over claiming error.

Also, generating accurate and complete records allow a tax agent or accountant to keep an easy track of the tax losses. This also ensures that no incorrect loss carry back or carry forward tax loss is deducted in the coming years. If your business makes a tax loss in the financial year 2022-23, you can carry forward it and claim a deduction in the future year.

For individuals, sole traders, and partnerships, there is an option to offset current year losses if you meet certain tax conditions.

Who Is Eligible For Claiming A Tax Loss?

  • Individuals
  • Sole Traders
  • Partnerships
  • Trusts
  • Companies
  • Consolidated groups

Businesses and companies are allowed to carry forward a tax loss indefinitely and use it whenever they choose to, unless they have maintained the same ownership and control.

In case, the change of at least 50% in ownership or control of the company is there, the following is required:

  • same business test
  • similar business test

For eligible commercial businesses or corporate entities, such as company, corporate limited partnership or public trading trust, claiming the loss carry back tax offset is allowed after checking the eligibility using our loss carry back offset tool.

A company has not maintained the same majority ownership will not be able to use its carried-forward tax losses if it has closed its business. This is because it will fail the same business test and similar business tests.