Business Deductions

admin · #1 (**permalink**) 1st March 2010, 09:35 AM

Below is a summary of various business deductions that you may be entitled to claim as a tax deduction. Note, as the list is general in nature we strongly advise you contact us to ensure that each expense can be cliamed by your business as there are many conditions attached to claiming certain expenses:

· Accident insurance premiums

· Accounting fees including Preparation of income tax and FBT returns etc. (s25-5) including costs relating to investigations, objections and appeals

· Advertising expenses

· Agent's commission Collection of rent

· Annual leave If actually paid by the employer (but not on accruing liabilities)

· Audit fees

· Bad debts

· Bank charges Including Debits tax

· Borrowing expenses: Claim in full if $100 or less, otherwise over period of the loan or one fifth each year if five years is shorter

· Bribes (public officials) No deduction is allowed, nor can the amount form part of CGT cost base

· Business trips

· Business related cost, certain business related costs of a capital nature that can be written off in equal amounts over five years

· Capital allowances such as buildings and structural improvements

· Car expenses Applies to employees, partners and self employed persons

· Car parking

· Cleaning expenses

· Clothing – certain categories

1. occupation specific (eg. chef's apron)
2. protective
3. compulsory uniforms
4. non-compulsory uniforms (if approved)

· Commissions paid to real estate agents for collection, etc. of property income

· Conference expenses

· Copyrights, patents and designs Capital allowance provisions (Division 40)

· Cultural bequests If made to Australiana fund, public art gallery museum or library

· Decline in value (depreciation) Of plant or articles used in business

· Directors' fees

· Discharge of mortgage expenses where loan money used to derive assessable income

· Discounts allowed

· Distributions by co-operatives To members

· Donations of property If market value is greater than $5,000

· Education expenses If paid for employees but FBT may apply

· Electricity connection costs To business premises - Capital allowance provisions (Division 40)

· Entertainment of employees But FBT payable

· Environmental impact studies Pooled and treated under the uniform capital allowance s ystem (decline in value)

· Environment protection expenditure

· Equipment service fees

· Exploration or prospecting For minerals (including petroleum) and quarry materials

· Film investment 100% deduction for investment in certain Australian made films

· Freight costs

· Fringe benefits tax

· Fuel and oil

· Gifts of $2 or more To certain prescribed or approved organisations

· Gifts to clients, etc But not if entertainment

· Gratuities to employees Recognition of past services (s25-30)

· GST Claims should be GST exclusive for those businesses that are registered for GST. The GST inclusive price is deductible for those taxpayers not registered or required to be registered for GST

· Hiring charges

· Home office expenses Apportionment of interest, rates, etc. only if a business is carried out on the premises and whether an area is set aside exclusively for that purpose

· Illegal activities Where taxpayer convicted of indictable offences (no deduction allowed nor can the amount form part of CGT cost base. Applies from 30 April 2005

· Improvements See 'Capital works' .

· Insurance premiums Accident insurance paid by employees, and other insurance paid in relation to a business or some income-producing property

· Interest paid On money borrowed to produce assessable income or to acquire an income-producing asset, or to pay business tax. Also on money borrowed by an employer to fund employee superannuation contributions. Deduction prevented under s67AAA ITAA36 regarding borrowings to fund personal contributions.

· Internet and data access costs Share investing and business websites

· Land tax Business or rental premises

· Lease payments

· Lease preparation, registration or stamping expenses Paid by either the landlord or (a business) tenant (s25-20)

· Leave payments Paid by employer (but not on accruing liabilities)

· Legal expenses Unless capital expenditure, including discharge of a mortgage (s25-30) or relating to borrowing expenses (s26-40)

· Licenses to operate business

· Losses, current year Loss claims by companies may be limited in certain situations (Division 165), (s170-10)

· Losses, previous years Company losses brought forward may be limited unless the company can pass the continuity of ownership test (s165-12) or the 'same business' test (s160-10); no time limit for losses incurred after 30 June 1989 (s36-10)

· Loss (book loss) on disposal of depreciable assets (s40-285(2))

· Loss on sale of property If proved to have been acquired before 20/9/85 for resale at a profit (s25-40);
if acquired later, loss claim under capital gains tax (s102-10)

· Loss through misappropriation by employees, or by theft (s25-45)

· Maintenance expenses (s8-1)

· Management expenses Annual fees but not the capital cost of subscribing to some income-earning investments

· Managing tax affairs Costs of travel, accommodation, advice, booklets, seminars etc, depreciation on computers, software and other capital expenditure is deductible if incurred in managing tax affairs

· Mortgage discharge expenses (s25-30)

· Mortgage protection insurance (s8-1)

· Moving trading stock

· Newspapers for employees Depends on occupation. Share traders (and maybe investors) can claim

· Overseas travel expenses Substantiation rules apply

· Payroll tax

· Petrol and oil Not subject to substantiation rules

· Petroleum resource rent tax

· Postage For investors or businesses

· Power, lighting and heating

· Primary producers

1. agistment fees
2. averaging
3. carbon sequestration
4. capital improvements
5. breeding service fees
6. donations of livestock
7. decline in value general provisions (s42-15)
8. electricity connection costs
9. Farm Management Deposits
10. fodder
11. general running expenses
12. grape vine establishment: written off over effective life (Division 40)
13. horticultural plantings write off if established
14. livestock
15. losses – no time limit; losses may be carried forward until absorbed (s36-10)
16. power/light/fuel
17. rates and land taxes on income-producing property
18. shearing expenses
19. soil conservation (business): expenditure fully deductible (Division 40)
20. telephone lines: capital cost written off over 10 years (Division 40
21. trading stock
22. trees – a deduction for felling rights
23. veterinary expenses
24. water conservation: expenditure written off over three years (Division 40
25. wool tax

· Printing and stationery

· Professional or business association subscriptions and fees

· Project expenditure To be written off over life of project

· Protective clothing

· Rates and taxes On income-producing or business properties

· Rebates and discounts Given to customers

· Rent of business premises Including part of the costs for a home used for a business (say, trading stock is stored in an area set aside exclusively for that purpose); but with a home office (or a study) rent cannot be apportioned, but some associated costs are claimable

· Repairs to cars, equipment, or to an income-producing property (s25-10)

· Research & Development costs

· Retiring allowances Paid to ex-employee (or their dependent) for past services (s25-50)

· Royalties Paid for use of equipment etc. – withholding tax may apply

· Salaries and wages paid to employees

· Scientific research related to business If incurred before July 1995 and R&D claim is not available: accelerated write offs for capital expenditure into scientific research (s73A ITAA36)

· Self-education expenses Only if related to employment/business

· Seminars

· Sickness/accident premiums In some cases

· Solicitor's fees such as

· discharge of mortgage (s25-30)

· relating to borrowing expenses (s25-25)

· Stock purchase

· Storage expenses

· Structural improvements

· Subcontractors

· Superannuation contributions

Full deductibility for all eligible contributions made by:
1. employers
2. eligible persons (ie. fully or substantially self-employed)
(Note: Contributions in excess of the relevant cap will be subject to excess contributions tax)
(Note: Other than for mandated contributions, deductibility is limited to age 75)

· Tax agents fees Preparation of income tax, fringe benefits tax returns, GST etc. (s25-5) including costs relating to investigations, objections and appeals

· Taxpayers Australia subscription

· Telephone expenses

· Telephone lines Installation

· Temporary investment allowance deduction

· Tool replacement Depreciation

· Trade journals

· Trading stock purchases

· Travelling expenses Domestic and overseas, but note the substantiation provisions

· Traveller accommodation buildings

· Uniforms

· Workcover/Workers compensation premium

· Worker entitlement funds Only if fund approval under regulations

Please note the information contained on this website is general in nature and should not be relied upon as tax advice. Tax Laws change and the information may be out of date. If you have a question please contact Sean Urquhart on 02 8264 0755.

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