Home – New Forums Money matters Recognising losses from earlier income years

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  • #978235
    ek
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    Hi,

    I set up a Pty Ltd company some years ago.

    I incurred a few expenses in the first few years and have kept records of these. I did not have any company income for those years.

    As I did not have any income for those years and my losses ie. expenses were below the $1,000 threshold required to roll these losses over to later income years without lodging a return, the ATO has recognised my company as a ‘return not necessary’ for those years.

    However, this year, I will be required to lodge a tax return.

    How do I recognise these earlier losses in my accounts? Do I now lodge a tax return for those earlier years?

    Thanks for your help!

    #1105602
    Chris Brodie
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    Hi Ek,

    Keep it simple and just record all the expenses from the previous years in this year. Otherwise you will need to go back and lodge returns for each year you incurred an expense, i.e. paying your ASIC fee. Putting all the previous years expenses in will result in the same outcome of these losses offseting your current years income.

    All the best,

    #1105603
    Marc D
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    Hi ek,
    If you had no income and expenses of less than $1,000 per year it may be questioned by the tax department as to whether the expenses were incurred in carrying on a business as it could be argued that you were establishing a business and the expenditure was capital or blackhole in nature. You can only amend tax returns for the previous two years anyway (4 in in some circumstances). The expenses and income must be reported in the period in which they were incurred. The tax office is in a recovery and collection mode and if last year is anything to go by, squeaky clean is the only way to go. You do have all the reciepts? Given the small amount of upside and the chasm on the downside of getting audited it may be better to just let them go and move on. Just an opinion

    Regards

    Marc

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