Corporation and Tax?
Posted on January 14, 2009 by admin
lazyl7 asked:
If I am running an IT consulting business through a corporation can i buy things such as Business Suits under the business. Providing me with a tax deduction.
Hi, I had a quick look on the ATO website and found this.
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An expense must be directly related to earning assessable income to be deductible.
If I am running an IT consulting business through a corporation can i buy things such as Business Suits under the business. Providing me with a tax deduction.
Hi, I had a quick look on the ATO website and found this.
–
An expense must be directly related to earning assessable income to be deductible.
** I found this in a list of example items**
clothing (corporate wardrobes and uniforms, occupation-specific clothing, protective clothing)
Wouldn’t a suit be classified as corporate wardrobe. A suit could be needed to provide a professional image to clients to obtain business.
The page this information was on:
http://www.ato.gov.au/businesses/content.asp?doc=/content/45586.htm&page=8&pc=001/003/011/001/001&mnu=573&mfp=001/003&st=&cy=1#P46_5401
Yes, it is a cost of running the business or a business expense. Yes, you can get a tax deduction, however keep all the purchase records. If you are registered for GST, i.e you have an ABN number you can get a tax deduction for GST you paid over the course of the year.
No you can’t.
Deductible expenses have to relate directly to the making of your business income – which business suits do not. Clothing is a personal expense not a business expense.
No
Clothing is a very restrictive category and by uniforms it means ones that have been approved by the ATO and the ATO requires them to have the name of the business (in a prominent position) to have the colours and style set out in a document and that the colours and style are in keeping with the corporate image. The work uniform is required to be worn at all times while on duty and is not to be used for personal purposes. I know that suits and various items of normal wear such as black trousers have been refused in the past because they could be easily used for personal purposes, in lay persons terms generally the clothes need to be of a nature that you wouldn’t be tempted to wear them for private social purposes so suits -nup.
Check out the following:
[Work related clothing- protective or industry specific]=&cy=1
[TD 1999/62 criteria for uniform]