You generally make a tax loss when the total deductions that can be claimed for a financial year exceed the total of assessable and net exempt income for the year.
If you operate a business that makes a loss you can generally carry forward that loss and claim a deduction for it in a future year. If you’re a sole trader or in a partnership, you may be able to claim business losses by offsetting them against your other personal income (such as investment income) in the same income year.
Businesses can incur many expenses, but not all of them are tax deductible. Aside from things like entertainment expenses, phone use and certain business travel, we highlight additional expenses you should think twice about before claiming. While we’ve previously run through some of the popular mistaken tax deductions, you should be aware of a few more to avoid questioning and potential prosecution from the Australian Tax Office.