This tax tip is based on our recent article in Startup Daily.
If you are operating your business from your home, there is a chance that you may be able to claim a tax deduction on some or even all of your home office expenses in your tax return. These expenses include rent, equipment, furniture and more.
There are a few questions that you need to answer first in order to determine whether you can claim rent and other home office expenses. Continue reading “TaxTipTuesday: I run my business from home. Can I claim my home office as a tax deduction”
Determining whether or not your meals can be claimed as a tax deduction can be very confusing for startups and small businesses. While its not a black and white area, there are some simple tips that you can follow to determine whether or not you can claim a tax deduction.
What are the questions you should ask yourself?
- Why is the food or drink being provided? That is, what is its purpose, if it is a social setting than the chances are its entertainment.
- What food or drink is being provided? As the meal becomes more elaborate i.e, a menu with matching wines, it starts to take the form of entertainment.
- When is the food or drink being provided? If the meal is provided during work hours, this is less likely to be entertainment, however it is important to consider at this point whether or not it its social.
- Where is the food or drink being provided? If the meal is consumed on your premises then it’s not likely to be entertainment. However at a restaurant it is difficult to say it isn’t.
These initial steps are what will help you work out whether your business lunch is tax deductible. Continue reading “Tax Tip Tuesday: When is my Business Lunch Tax Deductible?”
In this Tax Tip Tuesday, we look at a question many business owners and employees ask ‘Are my work clothes a tax deduction?’
The ATO allows a tax deduction for a cost of buying and cleaning occupation specific clothing, protective clothing and uniforms that are distinct to your place of work. So what does this mean:
1. Occupation specific clothing
If your occupation requires you to wear specific clothing, that clothing is not something that you wear everyday or in a casual setting, and the public can easily recognise your occupation from your clothing, you can claim a tax deduction for that clothing.
A classic example is a chef’s outfit including the checked pants that they wear. Not something you really want to wear out of hours!
2. Protective clothing
You can claim a tax deduction for worth clothes and footwear that protect you from illness of injury from your workplace or the environment you operate in. To be considered as protective clothing, it must significantly protect you from the risks present in your workplace. Some examples of protective clothing include:
- Safety vests, hard hats and steel capped boots worn on construction sites
- Sun-protection clothing for outdoor workplaces
- Non-slip shoes for nurses
While ordinary clothing may provide some protection, the ATO specially excludes a tax deduction for clothing that is required in your workplace but does not provide significant protection to you i.e. closed shoes.
3. Distinctive uniforms
You can claim a tax deduction for organisation specific clothing if the clothing has been designed and made only for that employer, it has the employers logo permanently attached and is not made available to the public.
If it is compulsory as part of your employment that you wear this uniform at work, you may also be entitled to claim items such as shoes and socks that form part of that uniform and their characteristics are specified in the employers uniform policy.
This Tax Tips Tuesday is brought to you with love by Nudge Accounting. You can read other Tax Tips here.
One area which causes a lot of confusion among businesses is whether they can claim meals as a tax deduction.
It gets really tricky, and is not a simple yes/no answer. In some instances the Tax Office will allow a tax deduction in your business tax return for your meal. In other instances, the Tax Office will consider your meal as “Entertainment”. When classed as “Entertainment”, you are also subject to Fringe Benefits Tax (another tax).
What causes a lot of confusion on this topic is that the ATO has not provided a clear definition of entertainment when it comes to meals. They have, however, provided some examples which we use as a guide, and which asks four questions to reach a decision as to whether your meal is entertainment or not. Continue reading “Can I claim meals as a tax deduction?”
“Is my business lunch a tax deduction” was our article last month for leading Start-Up publication, Shoe String Why? Because it is one area which causes a lot of confusion and start-ups and small businesses want to understand whether meals (and coffees) can be claimed as a tax deduction.
It’s not a black and white area so we thought that some simple tips can help go a long way in working out whether you can claim a tax deduction. So what are the questions that you should ask (and that the ATO wants you to consider):
- Why is the food or drink being provided – i.e. what is its purpose of the event. If it is provided in a social setting, then the chances are that is is entertainment
- What food or drink is being provided – is it a light meal provided at work or is it a set menu with matching wines. As the meal starts to become more elaborate, it starts to take the character of entertainment
- When is the food or drink being provided – meals provided during work hours are less likely to be entertainment, however with this point it’s especially important to consider the purpose and whether it is social.
- Where is the food or drink being provided – meals consumed on your business premises are less likely to be entertainment. At a restaurant, it is difficult to say it isn’t.
It’s important to consider these initial steps to help you work out whether you can claim a tax deduction on meals (and coffees).
And for more information on this, and the next steps we take at Nudge, you can read my article here.