SMALL BUSINESS HOME-BASED BUSINESS EXPENSES

This is a very common question as to what can be claimed. This information is based on ATO summaries and we hope you find it useful.

• Your business structure affects your entitlements and obligations when claiming deductions for your home-based business expenses.
• If you operate your business as a sole trader or partnership, you can claim a deduction for the costs of running your business from home.
• There are two types of expenses for your home-based business – running expenses and occupancy expenses. Whether you can claim running expenses only, or both running and occupancy expenses, depends on whether you have an area of your home set aside as a ‘place of business’.
• If you were entitled to claim occupancy expenses or you own your home and receive rental income from your business, there may be CGT implications when you sell your home. The main residence exemption may not apply for the proportion of your home and the periods that you used it for your business.

TRAVEL EXPENSES

As the owner of a small business, you can claim a deduction for expenses that you incur when you travel for your business. Common expenses include: Airline, bus, train, tram and taxi or ride-sourcing fares, car hire fees and the costs you incur (such as fuel, tolls and car parking) when using a hire car for business purposes, accommodation and meals if you are away overnight.

You cannot claim a deduction for any travel undertaken before you started running your business.

ATO TO IRON OUT FALSE LAUNDRY CLAIMS

The ATO intends to target false clothing and laundry work-related expense claims this Tax Time. In 2018, around six million people claimed work-related clothing and laundry expenses totalling nearly $1.5 billion.

CASH IN HAND PAYMENT TO WORKERS NO LONGER TAX DEDUCTIBLE

The ATO has reminded employers that any ‘cash in hand’ payments made to workers from 01.07. 2019 will not be tax deductible.