Are you an entrepreneur? A creative? Running a home-based business? Or simply just ‘sticking it to the man’? Regardless of whether you’re working the 9-5 in an office, your bedroom or by the pool – the government would also like to share in your successes.

Whilst almost nobody enjoys paying taxes, there are a few little tax incentives that the Government provides that could make a big difference to your bottom line. Generally, most expenses that a business incurs in producing income are claimable, so be sure to keep records of any spending that is business related!

Here are some tips to help keep more of your hard-earned cash in your pocket:

Home-Based Business Claims

Common costs that may be available for deduction are:

  • The cost of using a room’s utilities, such as gas and electricity – which must be apportioned between business and private use, based on actual usage.
  • Business phone costs – if a telephone is used exclusively for business, you can claim for the rental and calls, but not the installation costs. If the telephone is used for both business and private calls, you can claim a deduction for business calls.
  • The decline in value (depreciation) of office equipment, such as desks, chairs, computers. If equipment such as a computer is also used for non-business purposes, your claim must be apportioned between business and private use.
  • The decline in value (depreciation) of curtains, carpets and light fittings.
  • Occupancy expenses (such as rent, mortgage interest, insurance, rates). You can claim the portion of these costs that relates to the room or workshop you use as a place of business. A common method of working out how much to claim is the floor area (as a proportion of the floor area in your whole home).

Motor Vehicles:
Driving from client to client? Picking up a delivery? The government allows two different methods for claiming tax deductions on your vehicle: this can be calculated either by the number of kilometres travelled at the rate of $0.66 per km or a percentage of actual running costs which can include your fuel, registration, insurance, repairs, depreciation and interest including cleaning!

 However, be sure that you have records to back up any claim that you make. Keeping records in a logbook is a simple way to back up your claims and can be picked up at your local newsagent or online.

P.S. If you are going to claim a percentage of expenses, it is essential that you maintain all records relating to the running costs of the vehicle. A logbook needs to be kept for a minimum of 12 consecutive weeks and must record all trips the vehicle undertakes. If you are using the Cents Per Km method, the logbook must be kept for the full year showing business trips only.

Meal Expenses

Wine and dine your clients? Want to take your partner out to lunch and label it “a stakeholders meeting?” Not so fast. Before your order your next round, be sure to check out which meals are tax deductible and which are not.

Food and non-alcoholic drinks that are provided to employees on the business premises are generally tax deductible (however if the primary purpose is entertainment this may effect your ability to claim). Food and drink offsite is not. Meals with clients for marketing purposes are deductible for the employee costs (but Fringe Benefits Tax applies) but not the expense you incur for your client. However, for every expense you have with meal and drinks, note who was there, where it was and how many employees versus clients, so that you can determine the deductibility of that expense.

The exception to meal expenses is where you are required to travel overnight for work or business purposes. In this case, the meal expense may be able to be treated as a tax deductible expense. The rules get a bit more complex, and the best approach is to retain records of your expenses and seek advice from your accountant or tax agent.

For more information regarding tax deductions, visit the ATO’s website.
A big thanks to Victoria Berry from HBA Compass for details provided in this article!