Are you a little confused about which items you can legally claim as a write off? This week, I’m uncovering some of the nitty-gritty of business tax deductions, with a fun spin from our favourite Schitt’s Creek character, David Rose. If you need some help demystifying business expenses and tax deductions (particularly in the Australian context), then you’re in the right place.
So, what exactly is this thing called a write-off? Well, friends, it’s merely another name for a business expense or a tax deduction. Simply put, it’s anything you purchase to cut down your profit or taxable income, giving you lower taxes. You could see it as a secret goodie bag for your business – but remember, it comes with some strings attached!
The Australian Tax Office isn’t playing around when it comes to write-offs. They’ve got three golden rules which I explain today:
1. The purchase must be for your business, not personal use.
2. If the purchase is for both business and personal use, you can only claim the business portion.
3. You need records as proof, and no, bank statements don’t make the cut. You need tax invoices!
Knowing the what and the how of deductions and business expenses is great, but it’s pointless if you don’t keep your tax invoices. Keeping those ATO-required records is your secret weapon. Without them, you could be shelling out more tax than you need to.
Tax deduction eligibility will always depend on your unique business but to help you along, I’m sharing some common write-off categories that may be relevant to your situation. And while I know it’s tempting to turn to Facebook groups or your best friend’s aunt for advice, it’s always best to get advice from a qualified professional to avoid any tax troubles.
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