What is a tax deduction?

 

It’s that time of year when business owners are looking for extra tax deductions to reduce their taxable income. As accountants with real world experience we understand the quest to ensure every deduction you’re entitled to is included in your tax return.

 

What is a legitimate tax deduction depends largely on what business you’re in. As a general rule of thumb if you have to buy it to help you earn a living, it should be deductible, explains Tanya Titman, Director of Consolid8.

 

Here’s some of the strangest but legitimate tax deductions for business owners.

 

Business Tax Deductions – Our Pick

 

Food and Alcohol

Small business owners can deduct the cost of their meals and alcohol when travelling for work and stay away overnight. According to Tanya "it's vital you keep receipts and invoices" to be entitled to small business tax deductions. There's no particular distance the business owner needs to be away from home to claim the deductions – it just needs to be impractical to get home. We use a rough guide of 100 kilometres away from home or office.

 

Artworks

The $20,000 instant asset write off can apply to business owners who purchase artworks for the strict purpose of decorating their business. “Artwork needs to be displayed in the business’ reception area or boardroom, not the owner’s living room. The line is blurry if you have a home office, so best to stay away from this deduction if you work from home.”

 

Dogs

If you have a guard dog, you can add its food and vet bills to your business tax deductions. "Guard dogs can be eligible when the business or owner needs the protection they offer," says Tanya. The dog can’t just be your family pet.

 

Sunscreen, Hats and Glasses

“Various tax deductions are available to particular occupations or trades,” says Tanya. For example business owners who work outdoors, can claim the cost of sunscreen, hats and sunglasses.

 

Xboxes, pool tables and ping pong tables

The Australian Tax Office recently confirmed that small businesses tax deductions can now include the cost of Xboxes, pool tables and ping-pong tables if used in the business as employee entertainment.

 

“What’s important here is context” explains Tanya. “These items need to be used in a business context as part of a communal recreational room in a factory or office as a way of giving employees a bit of down time to get refocused.”

 

Tanya’s strangest tax deduction

“A previous client operated in the adult entertainment industry. Some of their legitimate tax deductions had me blushing.”

 

Looking for more tax deductions tips? Contact Consolid8 today and find out how your business could beneficiate from more tax deductions than you’d think!