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Loss-making SMEs reminded of their tax deduction rights

Adrian Flores
Adrian Flores
16 September 2020 1 minute readShare
Andrew Watson

The Australian Taxation Office has called on small-business owners to be more aware of their options around claiming tax deductions, especially if their business made a loss for the first time this past financial year.

In a video update from ATO assistant commissioner Andrew Watson, he acknowledged the 2019–20 financial year has been very difficult for many businesses.

He noted that business owners running a loss on their business for the very first time may not be aware that they can usually claim a deduction for it.


A recent Business Australia poll found that around 60 per cent of businesses reported sales losses of up to 75 per cent this year.

Only 18 per cent experienced a consistent revenue and a slim 9 per cent enjoyed a growth in sales.


However, Mr Watson also warned that there are some deductions businesses can’t use to create or increase a tax loss, such as donations and personal superannuation contributions.

Businesses are able to claim a tax loss depending on how it is structured.

“For example, if you’re a sole trader or in a partnership, and you meet the requirements, you can offset your loss against other assessable income in the same income year,” Mr Watson said.

“If you don’t meet any of the requirements, you can defer the loss or carry it forward to the next year you make a profit and offset the loss then.



“If your business is a company, you can generally choose what year you want to claim a deduction for a carried forward tax loss.”

Loss-making SMEs reminded of their tax deduction rights
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Adrian Flores
Adrian Flores

Adrian Flores is the deputy editor of MyBusiness. Before that, he was the deputy editor for SMSF Adviser as well as features editor for ifa (Independent Financial Adviser), InvestorDaily, Risk Adviser, Fintech Business and Adviser Innovation.

You can email Adrian at [email protected].

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