# ATO: How to claim a tax loss the right way



## Jack Malarkey (Jan 11, 2016)

From the Australian Taxation Office’s small business newsroom:









How to claim a tax loss the right way


Reduce your tax liability with a business loss.




www.ato.gov.au






*How to claim a tax loss the right way*










*13 September 2021*

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.
Remember, registered tax and registered BAS agents can help you with your tax.

*Find out about:*

Business losses
*See also:*

What is a tax loss?
How to claim a tax loss
Companies – similar business test
Loss carry back tax offset


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