The “Dos” and “Don’ts” of claiming expenses

The “Dos” and “Don’ts” of claiming expenses

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Did you know? 

The Australian Taxation Office (ATO) has very specific rules for claiming a deduction for expenses. 

“The Dos”

On this webpage,the ATO shares what it calls ‘the three golden rules for claiming your business expenses’. We call them the “Dos”. They are: 

  1. ‘The money must have been spent for your business (not a private expense’). 
  2. ‘If it is for a mix of business and private use, only claim the portion that is related to your business’. 
  3. ‘You must have records to prove it’. 

We can help you to set up automated processes which will allow you to easily document these expenses. It is much more efficient to use software to help you, instead of finding yourself going through a mountain of fading receipts at the end of the financial year! Let us help you get some time back. 

“The Don’ts” 

Some things cannot be claimed, as highlighted here by the ATO. One area that many small businesses need to be careful of, is trying to claim ‘expenses’ for things that are actually defined as entertainment. We recommend that you take a look at this article, and some of the ‘entertainment’ examples that the ATO provides, including: 

  • ‘staff social functions’
  • ‘business lunches with clients’ 
  • ‘product release functions’ 
  • ‘golf days’ 
  • ‘gym memberships’ 
  • ‘sporting club memberships’ 
  • ‘reward and recognition functions’. 

You may actually need to pay fringe benefits tax for these examples, so take a look at the details on the connected webpages if it is relevant to you. We are happy to discuss how we can help you to efficiently comply with these requirements.

We look forward to hearing from you! 

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