This week’s winning question! Not only our own personal favourite, but well liked by our fans.
Congratulations PT on winning a $40 Movie Pass, we enjoyed answering this question and we’re pretty sure you know that Mel has a weakness for Guns & Roses!
Can you claim a Guns and Roses road trip as a business expense? PT
Travel is deductible where it relates to your business or work activities. A log/diary of the travel must be kept describing the nature of the activity, where you engaged the business activity, and its duration. You must keep all receipts for the cost of the travel. If there is a mix of business and private activity to the travel, you must exclude the private expenses from your claim.
So, PT – if you can demonstrate that the Guns & Roses trip is relevant and related to your business (e.g. research, new markets, professional development, new products, etc) then you can claim it as a business expense.
And here are the other great questions this week….
Gotta question bout your super segment in Money With Mel yesterday – did you say contributions at calculated @ 9% on ORDINARY rates?
As I’ve been calculating it on staff gross wages which include penalty rates from w.e’s etc.
Great question! And one that is asked quite often. It is a tricky area and certainly one you want to get right. All employee entitlements are hot on the ATO radar – as well as the minds of your employees. If in doubt ask us – that’s what we’re here for!
Question for Mel. If I take a client out for dinner is it better for me to just cover this cost personally or to claim on the company and pay FBT?
Entertainment is a tricky thing at the best of times, and more so if you do trade as a company. As you rightly point out, this then adds in the issue of Fringe Benefits Tax. However, FBT is only payable on benefits you provide your employees or their associates. FBT is not payable on expenses you incur for people who are not employed by you or related to someone you employ (e.g. your Clients).
That’s the good news! The bad news is that as a general rule entertainment is not tax deductible. So, if your company pays for the dinner it won’t get the tax deduction for it. And, if you’re an employee of your company there will be FBT on your share of the dinner cost.
So, better pay for the dinner yourself and avoid all the hassle – the benefit will be the goodwill you’re building with your Client.
Thanks for taking Questions Mel:- Recently set up as a sole trader, working from home office and invoice for services. Is it necessary to keep an ongoing log of hours worked at home to claim internet, phone, and electricity costs – or just for a certain period of say 3 months then apply to entire year? Thank you.
How you work out these costs is up to you.
* You can do as you say, keep a log for 12 weeks that would be indicative of the usage over the whole year.
* You can measure the actual usage over the whole year (or increase in usage since the business started).
* Or, you can calculate based on square meters used for business purposes as a % of total house size as you see, there is either a lot of work in keeping these records and making the calculation or a little.
I would suggest that the method chosen would depend on the scale of your business and its consumption. If it were a lot of hours and quite IT/electricity consuming I would want it to be spot on and based on actual consumption. If more part-time then the logbook or square meter methods should give you a fairly close outcome.
For more information on what you can claim as a home based business see the following: http://www.ato.gov.au/businesses/content.aspx?menuid=0&doc=/content/43191.htm&page=1&H1