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Sam D.
Sam D.
Glenorie, NSW

2 years ago we started a new business and spent about $300,000 so far. It’s not working out as well as we hoped and now thinking about closing it down and getting a job – the question we have is about the losses we have in business… can they be offset against the future income when we find employment?

2 years ago


Hello Sam,

sorry to hear things are not working out for you mate.

Knowing when to pull the pin on a non-performing business is very important. It seems that you have already made that decision so I wont bang on about this.

But the losses are significant and you need to ensure that you can utilise them if possible.

so as a rule, if your business was sole trader or partnership then the losses are yours and carry forward to be applied against future assessable income

If you traded through a company or trust, then the losses are trapped in that entity and you cannot apply then against your future wages income. IF the company or trust gets income it will be able to apply those losses, so you should think about whether or not you might be able to utilize those losses somehow, because those losses never expire....at some point you might find yourself in a positiion to use them.

Best thing to do is get in front of a good accountant and figure what you CAN and CANNOT do from here.

good luck

Hi Sam,

Without knowing your business structure we cannot give a definite answer.
Depending on the business, if there is scope to sell it to recoup some of the investment, will make a difference.
First two to three years are always the hardest, especially in the current market.

Before you make a final decision please sit with your accountant and get advice, consider options fully. Even liaising with a business coach/advisor may help, see if there is potential to turn it around.

Good luck!

Hi Sam,
The short answer is no! You can’t offset a company loss against PAYG income. I found myself in the same position 10 years ago and I maintained the company and the accounting of it until I started my current business 4 years ago. I am (slowly) offsetting both the trading losses and the capital losses against current income.
Best of luck with the new chapter.

Hi Sam,
It's important to understand which entity is in business. If it is you personally and you don't get caught by the "non-commercial loss provisions" then the loss incurred can generally be carried forward and offset against future taxable income.

If the losses incurred in a separate taxpayer (company or trust) Then the losses will be available to offset against income of that taxpayer in the future

Good luck

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