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  • #986188
    sailing solo
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    Hi, this is my first post -Thank you all for reading it.

    Here’s my scenario:

    I operated a business as a sole trader for about 5 years.
    All years either made a loss or a small profit below the taxable threshold.

    The only tax year that I lodged was year 2 of my business. (This indicated a small loss).
    I now have to lodge the 4 outstanding tax returns.
    Years 1, 3, 4 & 5.

    Using old tax packs I have just realized that in year 1 I had a deferred loss of $5000.
    However as year 2 was lodged and processed years ago it did not include this deferred loss.

    Should I now submit a “request for amendment of income tax for individuals” form for year 2 explaining that it should have indicated a deferred loss from the year before.

    And how should I take the accumulated deferred losses in to consideration when filling out year 3’s tax return?

    Any help is much appreciated thank you.

    #1156705
    Healthy Personal Finances
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    My questions would be :
    Are you continuing to trade ?
    Are you anticipating making a profit in the future ?

    The only benefit of carrying forward a tax loss is to offset it against future income (profit).
    If the business has since ceased, and you are just playing catch up with the ATO – I don’t see any real reason to amend the original return.
    If you do lodge an amended return showing an opening loss brought froward from Year 1, you would also need to lodge the Year 1 return so that the ATO can see what that loss is made up of.

    Hope that helps a bit.
    Cheers
    Stacey

    #1156706
    sailing solo
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    Hi Stacey, thank you for your rapid response.
    I’m no longer trading or anticipating a future profit.

    My concern is that if the $5000 loss from year 1 and $500 loss in year 2 are not both taking into account in year 3’s return, then I may have to pay a tax contribution ion for year 3.
    Deferring the combined losses from year 1 and 2 will help offset year 3 profits and ensure that any profit made in year 3 was below the taxable threshold.

    I am about to lodge year 1, 3, 4 and 5 so there is no problem showing where the $5000 loss came from in year 1.

    So in summary I’m worried that if I do not lodge a year 2 amendment form highlighting the deferred loss from year 1 then the ATO will only bring forward the $500 deferred loss from year 2, to year 3 instead of the $5500 deferred loss from year 1 and 2, to year 3

    #1156707
    nighttax
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    I recommend you see a local accountant. Sounds like very basic work that you are complicating by your lack of knowledge. Should not cost you too much.

    regards

    Evan

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