Home – New Forums Money matters Claiming company setup costs

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  • #988013
    whoosh
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    • Total posts: 4
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    Hi All,

    Apologies if this has been discussed somewhere else, i couldn’t seem to find anything similar to my question.

    I recently launched a website business which relies on a membership base as income. The initial set up cost of this was approx. 25k which i have loaned the business.
    It has been set up as a PTY LTD Company and registered for GST.
    The business has been running for 2-3 months now and the income is significantly down on our original forcasts.
    At this stage we will be lucky turn over 1k before the end of the financial year.

    My question is this:
    Will i be able to claim any portion of the money spent on the start up costs this financial year?

    I have also purchased a new vehicle (applied graphics as a mobile billboard) to which i use 70% of the time for business. Am i still eligible to claim the $5000 for a new car purchase if my income is only $1000? Am i still able to claim the GST on that purchase?

    Iam also a full time employee on salary of another company.

    Any assistance is greatly appreciated.

    #1165256
    al.giffard
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    • Total posts: 97
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    Hi Whoosh,

    I’m sorry to hear things haven’t started off as strongly as you’d like. I do hope that turns around soon.

    There’s no limit on claiming expenses just because you have low income this year – it just means the business will make a loss this year, for tax purposes. You can then use that loss next year when you hopefully make a healthy profit. For example, if you make a $10k tax loss this year, and a $50k profit next year, you’ll only pay tax on $40k of the profit.

    So yes, the amount you claim for your car will be the same as if you had made a profit. So too is the amount of GST you can claim (you should, however, see an accountant to make sure you avoid having a Fringe Benefits Tax obligation, if the car belongs to the company).

    Claiming the set-up costs is a bit more complicated (regardless of whether you make a profit or loss), because you probably can’t claim all of the expenses at once. Some expenses you’ll likely have to depreciate, or claim over a number of years.

    Finally, it’s worth noting that the company making a tax loss won’t change your personal tax situation (ie, you won’t be able to claim the company’s business expenses against your personal salary income). You and the company are considered separate entities.

    Hope that helps.

    Cheers,

    Al.

    #1165257
    Dave Gillen – Former FS Concierge
    Keymaster
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    Hi Whoosh,

    Sounds like you’re being steered in the right direction by Alan. I just wanted to welcome you aboard the forums and wish you the best of luck for the next financial year. :)

    Dave

    #1165258
    whoosh
    Member
    • Total posts: 4
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    Al / Dave,

    Thanks for your replies, much appreciated and very helpful.

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