Expense checklist
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For business expenses to be deductible, taxpayers must prove that the expenses are connected to their work or business and incurred in gaining or producing assessable income. Some expenses like travel require detailed proof such as diary records. Tax treatment of expenses is rarely black and white and the tax office may take a contrary view, so taxpayers should avoid overstating deductions. The document then provides examples of expenses and whether they would generally be deductible (D) or non-deductible (ND).
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Expense checklist
- 1. For 'D' expenses they must be sufficiently connected to your work or business activity. You must be able to prove that connection and that you incurred the expenses: usually with written evidence such as a receipt. Some expenses like travel expenses require more detailed proof such as diary records. ND" expenses may be important in future if they related to investment or asset purchases because they could form part of the cost base for capital gains tax purposes. Tax is rarely, if ever, a black and white categorisation exercise into 'D' or 'ND'. As Beech-Jones J of The Supreme Court of New South Wales concluded when that little battler Aussie John Symond was suing his tax advisors: an overemphatic statement about the operation of the tax law by a competent tax advisor should always be avoided. In other words, always remember that "the tax office may take a contrary view". Happy deduction hunting. Accident insurance premiums D Accountant’s fees for preparing returns D Accrued leave entitlements, transferred employee payments D Advertising expenses D Appeal costs relating to tax disputes D Audit costs, including ATO audit D Bad debts D Bank charges for a business D Bank charges if not in business ND Bills of exchange, discount factor D Body corporate fees on rental properties D Borrowing expenses D over time Bribes ND (Sorry Eddie Obeid) Briefcases D Buildings and structural improvements D over time Business, cost of purchasing ND Business operating expenses D Business subscriptions D Business trips, expenses of D Capital loss (net) ND Car expenses (non-business) ND Car expenses (businessor work related ) D subject to log books etc Carbon pricing D Child minding expenses ND Protective clothing D Clothing generally ND Club fees (not a fringe benefit) ND Commissions D Commuting to and from place of work ND Company loss carry-back D Competition, payment to avert ND Computer software D Consolidation valuation expenses D
- 2. Convention expenses D Corporate wardrobes and uniforms D Costumes D Credit card fees used for work-related purposes D Death or disability benefits provided by superannuation fund D Debt/equity swaps resulting in a loss D Depreciation of business assets D Discontinuance of business, expenses associated with ND Discounts or rebates on sales income D Distributions by co-operative to members D Dividends paid by companies ND Donations D Driver’s licence ND Dues: union, professional or business associations D Education expenses D Election expenses: local government D Election expenses: parliamentary D Electricity connection costs D Employer’s costs of share scheme D Employment agreement expenses: employer D employee D Employee’s expenses: Clothing that can be work outside of work ND Non slip or protective shoes D Self-education D Shoes generall ND Special clothing, purchase and laundering D Technical and trade journals D Tools of trade D Travel, but generally excluding to and from work D Entertainment expenses ND Environmental impact study expenses: general D mining D Environmental protection expenditure: general D mining D Equipment (work-related) D but maybe over time Eviction proceedings against tenant ND Excessive remuneration to relatives or associated persons ND Exchange loss D
- 3. FBT payments D FEE/HELP - payment towards fees of debts ND Feasibility study expenses for new business ND Feasibility study expenses for new project D Film (Australian) investment D Financial arrangements losses D Fines ND Fitness expenses ND unless extra special fitness is required for your job. Fixed capital assets, cost of protecting ND Food, personal or family requirements ND Forestry expenses D FOXTEL subscription ND Fruit and nut trees, costs of ND (unless part of new horticultural plantation) Geosequestration expenditure D General interest charge on tax debts D Gift valuation fees under the Cultural Program D Gifts: advertising or public relations D Gifts of works of art and heritage items D Gifts of $2 or more to prescribed donees D Gifts: tickets to charity events D but only to a limited extent Glasses (sun/anti-glare) D if working outdoors Glasses generally like for reading ND Gratuities to employees D Grooming costs ND GST payments ND Guarantee payments ND HELP payments ND Higher qualification expenses D Hobby losses ND Home office expenses, unless home is used for income-producing purposes ND Home office expenses where home is used as business premises D beware CGT on the back end Illegal activities, expenses relating to ND Income tax ND Insurance company, unreported claims D Insurance premiums (business related) D Insurance premiums under key-person life or endowment policy ND Interest on borrowings for employer superannuation contributions D Interest on borrowings to finance life premiums ND Interest on borrowings to finance personal superannuation contributions D if the contributions are D Interest on borrowings to pay income tax D if you are in business Interest on infrastructure borrowings ND Interest on late lodgment of tax returns D Interest on late payments of tax D Interest on money used for assessable income production or purchase of income- producing assets D
- 4. Interest on money used to pay HELP D if course directly work related Interest on partner’s capital ND Interest on underpaid tax where assessment amended D Interest referable to home office where home used as business premises D but beware CGT on the back end Interest withholding tax D Investment losses D Investment portfolio, expenses of servicing D Land tax on business premises D Land tax on rental property D Late payment penalty interest D Lease incentive payment D Lease premiums ND Lease preparation expenses D Lease surrender payments ND Lease termination payments (business) D Leasehold improvements ND Leave accrued but unpaid ND Leave payments made by employer D Legal expenses: Proceedings affecting future income-earning D Relating to borrowing or mortgage discharge D Tax advice costs D Legal expenses re capital purchases like investment properties ND Legal expenses, personal: Home purchase ND Custody application ND Obtaining divorce ND Will preparation ND Leisure facility expenditure ND Lessee’s legal expenses in defending lessor’s attempted termination of lease ND Lessor’s or lessee’s payment to secure early termination of non-business lease ND Lessor’s or lessee’s payment to secure early termination of business lease D Living-away-from-home allowance expenses D Loss carry-backs D Losses of certain former bankrupts ND Losses (company) of current year D Losses (trust) of current year D Losses on isolated business transactions D Losses: previous years D Losses (trust) of previous years D Losses through theft or misappropriation D Losses, transferred from group company D Low-cost items D Luxury car lease expenses D but limited
- 5. Luxury car lease notional loan principal ND Mains electricity connection D if business premises Maintenance payments ND Management expenses, investor D Meal costs ND Mining expenditure D Modernisation of premises or plant ND but depreciable over time Mortgage discharge expenses D for investments Motor vehicle dealers: warranty repair costs D Municipal rates on business premises D Municipal rates on rental properties D Natural disasters recovery expenses D Net capital loss ND Newspapers and magazines D Overtime meal allowance expenses D if allowance received Parking fees D Partner’s salary ND Partnership, interest on loans ND Partnership, share of net losses D Penalties and fines ND Penalty tax ND Petroleum resource rent tax D Plant demolition costs ND Plant (installed), cost of bringing to full operation ND but depreciable over time Political parties, contributions and gifts by non-business individuals D Political parties, contributions by business ND Primary producers: Agistment fees D Breeding service fees D Depreciation D Droving expenses D Electricity connection costs D Farm management deposits D Fertiliser D Fodder D Food for employees D Grapevine establishment costs D Hire of farm implements D Horticultural plantation establishment D Insecticides, weedkillers, rabbit fumigant D Insurance premiums D Landcare expenditure D Lease preparation expenses D Low-cost items D Mains electricity connections D Marketing and delivery expenses D
- 6. Motor vehicle expenses D Newspaper (rural) expenses D Payment to co-ops for business services D Payroll tax D Power, fuel, light D Printing, stationery D Rates and land taxes D Rent on farm property D Rent on residence used by employees D Repairs D Salaries and wages D Seeds D Shearing expenses D Subscriptions to producers’ organisations D Telephone expenses in business D Telephone line expenses D Timber felling deduction D Vaccination against Q fever D Veterinary fees D Water facility expenditure D Wool levy D Workers compensation premiums D Private or domestic expenditure ND Professional journals: subscriptions D Professional qualifications D Project infrastructure costs D Promissory notes, discount factor D Protective clothing D Provisions and reserves ND Regional headquarters set-up costs D Relocation expenses incurred by employee ND Relocation expenses incurred by employer D Rent collection, commission on D Rent for business premises D Rent referable to home office (business) D Repair costs under warranty D Repairs to family residence ND Repairs to income-producing property D Repayments from illegal activities ND R&D expenses (notional deductions only): ND Reserves and provisions ND Restrictive covenants ND Retiring allowances D Salaries paid in business D Self-education expenses D Self-insurers’ provisions for workers compensation D
- 7. Service fees D Shortfall interest charge D Sickness/accident premiums D Software expenses D Solicitor disbursements D Spare parts D Sponsorship fees D Structural improvements D over time Student financial supplement scheme: debt repayments ND Subvention payments ND Superannuation contributions by: employer D self-employed persons and unsupported employees D Sunscreen D for outdoor workers Superannuation funds operating expenses D Superannuation guarantee charge ND Superannuation supervisory levy D Superannuation trust deed, amendments ND Takeover defence costs D Tax advice costs D Tax agents’ fees D Tax return lodgment costs D Technical qualifications D Telephone expenses if work-related D Telephone lines on primary production land D Telephone “silent” number fee ND unless undercover cop with a ruling Tender costs D Timber depletion D Tools, depreciation and cost of transporting and insuring D Trade qualification ND Trade union dues D Trading stock D Trading stock taken to new premises D Travel costs of accompanying relative ND Travel (relocation) costs paid by employer D Travel expenses: commuting to and from work ND in search of employment ND spouse accompanying taxpayer on business trip ND Travel expenses related to business D Traveller accommodation buildings D Trees, carbon sink forests D Trees, purchased in immature forest or plantation and sold standing D Uniforms, special clothing for employees D
- 8. Union officials’ election fund levies ND Vaccinations ND Volunteer worker’s expenses ND Water facilities D Water rates on business premises D Water rate on rental properties D Work clothes, suitable for use outside work ND