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Set up costs and tax..?

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5 replies to this topic

#1 princess_piggy

Posted 27 November 2012 - 09:52 AM

Hi all,

I am looking at starting an at home business, there will be some set up expenses that I will incur this financial year, but I probably won't start generating any income until next financial year.
Can I set up an ABN and do a tax return including these set up expenses without income so that I can then carry the losses over to next financial year when I start making money??


#2 PrincessPeach

Posted 27 November 2012 - 09:54 AM

Yes - setting up as a sole trader, you can include the losses in your current year's tax return & these losses will be carried forward until you make a profit - or declare more than $20,000 of income.

#3 qak

Posted 27 November 2012 - 10:08 AM

What is the nature of the setup costs - if they are capital you may not be able to write them off in the first year?

#4 princess_piggy

Posted 27 November 2012 - 10:17 AM

Set up costs would be things like a new computer and software, (it's a photography business), new lenses for my camera etc.

Am I better off trading as a 'hobby' until I know how much I am going to make out of it?
All so bloody confusing!

#5 Puggle

Posted 27 November 2012 - 10:28 AM

That's a tough one. Having started my own business and still going three and a half years later, I'm reluctant to advise anyone to spend up 'big' up front. I was lucky in that mine didn't require many start up costs and funded its own expansion, but even so, costs add up very quickly. I traded as a hobby business for a year or so, then wanted to register my business name etc so got an ABN at the same time. I arranged this in early July so from that tax year declared income etc.

All the best with it.

#6 Sassy Dingo

Posted 27 November 2012 - 08:17 PM

QUOTE (princess_piggy @ 27/11/2012, 10:17 AM) <{POST_SNAPBACK}>
Set up costs would be things like a new computer and software, (it's a photography business), new lenses for my camera etc.

Am I better off trading as a 'hobby' until I know how much I am going to make out of it?
All so bloody confusing!

These are capital items. You would have to depreciate them over the effective life of the item. If they cost less than $1000, you can immediately write them off and carry forward losses until you hit $20,000k of turnover as a PP mentioned.

Info on depreciation:


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