The ATO has identified some common mistakes in claiming business deductions and with 30 June fast approaching, here are some handy tips to reduce errors while claiming business expenses.
- Only if a motor vehicle is entirely used for the business, can a deduction for the whole amount be claimed. If it is used for a mix of business and private use, the expense needs to be apportioned and only the business portion claimed.
- Business expenses need to be kept separate from private expenses such as private rent, fines, travel, food and renovations of a private residence.
- When accounting software is upgraded, it is important to check that business and private expense codes are correct.
- Business expenses must be claimed at the GST exclusive rate if they are registered for GST, not the GST inclusive rate.
- If a small business operates as a company or trust, paying private expenses from these accounts may have other tax implications such as fringe benefits tax and shareholder loans.
At DGL we are here to help you get it right and satisfy the following three golden rules:
- The expense must have been for your business, not for private use.
- If the expense is for a mix of business and private use, you can only claim the portion that is used for your business.
- You must have records to prove it.
For more information regarding business expense claims see also:
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Whether you are an individual or in business, we have the experience and advice you need.
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