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Travel can certainly be part of running a business, but what constitutes travel that you can claim at tax time? Holidays certainly don’t count, but many try to tie business in with pleasure, so where’s the line?
Let’s start with the normal definitions of what you can claim as tax deductions when it comes to travel and go from there…
Costs like public transport, taxis and flights are generally the obvious ones but there’s certainly more to deduct that can make your travels work better for your financial situation at tax time:
Be aware though that there are some caveats with some of the above.
Transport expenses are one of the more common deductions but, be aware that work-related travel in your car or on public transport is only claimable if it isn’t your normal travel to-and-from work. This also applies to parking, where you can not claim parking at your normal place of work or home.
Again, car parking is in line with this – you can claimparking costs if you’re attending a company meeting or event off-site and youuse your own transport to get there, but you can’t claim parking costs if youdrive to your normal workplace and pay for parking there.
This is a good time to mention, if your employer reimburses you for any travel expenses (parking, fuel or other), you can not claim that.
If you’re travelling for more than six consecutive nights, keep a travel diary to record where you are each day and what you’re doing each day. You’ll want to include start and end times of the work related activities you’re involved in too.
It doesn’t need to be a long story for each entry, simply something like:
– 7:00am flight to Melbourne –Arrival 8:30am
– 8:30am – 9:30am Taxi fromTullamarine Airport to St Kilda
– 10:00am – 5:00pm BusinessConference
– Overnight at Rydges St Kilda
As with any tax deduction, always keep your records for any travel. You can link them to your diary entries by day or simply take photos of receipts and store them in dated folders on your device. Either way, the ATO will need these as proof if they decide they’d like more information and without them you’ll be unable to claim the deductions.
In most situations, if you receive a travel allowance from an employer, it’s considered taxable income and treated as such at tax-time, but if you spend that money on travel, you can claim the portion spent as a deduction.
This means you can only claim the portion of your allowance actually spent on work-related travel. So, if you receive $2,000 annually from your employer and you’ve spent $1,500 on work-related travel, you can only claim deductions for the $1,500 you spent, not the entire amount.
Once again, receipts will help you make the right deductions.
Here’s where the lines can get a little blurry, but by now your travel diary and keeping of receipts can be what helps you here.
The rules are pretty simple:
• The primary purpose of your trip must be work-related
• You can’t claim any part of the trip that isn’t work-related
For example, if you travelled interstate for a five-day conference and decided to stay on for an additional two days to enjoy yourself here’s what you can claim and what you can’t:
• Accommodation costs for the four nights or five days the conference was running
• Taxi/uber/transport costs from the hotel to conference and back
• Meals during the conference period
Claiming flights and travel to-and-from airports needs some calculations to understand what’s deductable … Out of the 7 days you’re away, 5of those were work-related meaning 71.5% of your trip is work related. This means you can claim:
• 71.5% of your flight cost
• 71.5% of the travel to-and-from the airport(s)
You cannot claim leisure expenses like the cost of accommodation, meals, transport or car hire for the two leisure days you spent while away. If you add a partner or child onto your trip, you can’t claim any of the expenses they incur, and you can’t claim extra flights that aren’t related to the work portion of the trip either.
This scenario is completely different if you’re away on a holiday and decide to go to a work conference. In that scenario, you can claim the costs related to the conference alone and none of your flights or travel that took you to your holiday destination. This is because, the primary purpose of the travel is NOT work-related.
To ensure you’re staying on top of how you or your business treat travel expenses and any other tax-related matters, speak with the Attune team. Our tailored accounting services are designed to fit your situation, enabling you to keep doing what you do best. Give the team a call on 1300 866113 or send us an emailto start the conversation, you won’t regret it.
Are you aware of the incentives available for up-skilling your staff? The scheme is called the Skills and training boost and it offers you a 120% deduction on money spent training your staff. There is also a related scheme called the Small Business Technology Investment Boost that allows the same level of deductions if your business and the expenditure qualify.
If you’re looking to upgrade your business whether it be through staff training or additional tech to support your needs, then read on …
In the 2022-23 budget, the Government announced it will support small businesses looking to up-skill staff by creating a tax incentive.As you’ve already seen, small businesses (with an aggregated annual turnover of less than $50 million) will be able to deduct an additional 20% of expenditure incurred on eligible training courses provided to employees. As it currently stands, the scheme commenced on March 29, 2022 and will be available for claiming against until June 30 2024.
Eligible businesses can continue to deduct expenditure that is ineligible for the bonus deduction under existing tax laws.
There’s currently no “clear” list of eligible training courses, referred only to those that are “registered training courses inAustralia”, but we can help you navigate this as part of your business and taxation planning, so reach out to the Attune team if you would like help assessing your eligibility.
Once again, the budget for 2022-23 included a tax incentive for businesses who are looking to support their digital adoption. This includes(but is not limited too) the addition of portable payment devices, cybersecurity systems or subscriptions to cloud based services. As you think about each of these technical additions, you’ll likely find a place for them in your business if you’re not already using them.
The deduction once again allows businesses to claim an additional 20% of the cost incurred and depreciating assets that are eligible.
Importantly, there is a $100,000 cap on expenditure that applies each qualifying income year, but you’re able to continue to deduct expenditure over $100,000 under existing tax laws.
The Small Business Technology Investment Boost also commenced on March 29 2022 and will be available to access until June 30, 2023.
Once again, there are some specifics around what is eligible as far as expenditure goes, but the Attune team are here to help advise how you can best structure your adoption of tech from a tax perspective.
If you’re looking for tailored strategic advice to help grow your business alongside incentives like these, we’re here to help. Call theAttune team on 1300 866 113 or send us an email to start the conversation.
With rising cost of living, interest rates inflation and general economic fluctuations impacting so many in the second half of 2022, it was forecasted that we’d collectively be spending less at Christmas this year.
WhetherAustralians are saving for rainy days ahead, or simply can’t afford the usual Christmas splurge, research conducted by Compare the Market revealed that more than 40per cent of Australians said they’d spend less than they have in the past this festive season.
Was that the reality? The dust hasn’t yet settled enough to really understand the numbers, but it’s certainly worth looking at to reveal the true cost of the current economy to households.
That same survey suggested around 10 per cent of respondents said they’d be looking closer at holiday sales than they have before.
Almost all respondents cited rising interest rates alongside higher cost of living as the reason behind their shift in fiscal thinking. With fuel price fluctuations, higher energy costs and so many other areas of our budgets affected, it’s little wonder we’re keeping our wallets in the drawer.
The affects are far reaching, with 35 per cent of respondents even going so far assaying they’ll not be doing Christmas lights this year to save on purchase and running costs…
1: Will lower spending do further damage?
It’s almost a catch 22, but with lower spending comes a drop in revenue for businesses who’d normally do their best over the end of year period. This could ultimately affect employment statistics and even further impact income levels of those most vulnerable to the situation by way of less available working hours or even total job losses.
2: Will it mean the “sale” season will make up for it?
If money saved in the lead up to Christmas finds its way back into the economy through a bumper sale period the whole issue could be null and void, but what’s the cost of this to businesses? Well, a reduction in margins on products could still create the same issues as above, leaving less room to pay staff from profits even though turn-over may have come back somewhat.
3: What’s the effect moving forward?
Well, the outcome of lifting interest rates is almost designed to slow spending, and if the research referred to above is indeed correct, it’s done its job. But, again, what then is the overall outcome? Hopefully we see easing financial pressures in the first half of 2023 (as has been forecasted) that will ultimately allow more financial flexibility for those affected, giving businesses back the revenue they may have missed over the Christmas period.
As the new year rolls in, we’ll have a clearer picture of our collective economic future, but research like this reminds us: having the right strategy for your personal and business finances can help you navigate rougher seas. So, if you’re looking for tailored strategic advice to build or bolster your financial position, the Attune team will be here in 2023to help make it happen for you.
Start the year right, send us an email (anytime) or give us a call on 1300 866 113 (after January 9) to set up an appointment to secure your financial future.
Inflation is “public enemy number one” according to our treasurer, but many Australians don’t quite grasp what it is and how it impacts our every day lives. With this in mind we thought we’d put together a brief overview of what “it” is and how it affects our financial situations.
In economics, inflation is defined as an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduction in the purchasing power of money.
Let’s make it simple: If you bought an item today for $100and the same item cost $105 on the same day next year, inflation for the year on that one item would be 5%.
Inflation is a major economic indicator of performance, driving economic policy and decisions made by the Reserve Bank of Australia(RBA).
It’s measured in Australia mostly by the Consumer PriceIncrease (CPI), which is calculated here but the Australian Bureau ofStatistics (ABS). Published quarterly, the CPI measures the percentage change(just like in our example above) of a variety of common goods and services.
To do the calcs, they consider how we spend our income, weighing up categories of goods and services against each other as part of a“CPI basket” of sorts. Importantly, grocery and general housing costs take a greater portion of an inflation calculation because they generally make up the largest portion of our pay checks.
Here are the official CPI categories:
It’s important to note that high inflation is often a result of strong economic growth even though, consumers can have reduced purchasing power, with the value of their earnings lowered. This kind of outcome seems to level the playing field, which is why an inflation target is important in managing price stability and the welfare of Aussies.
Overall, the RBA specifically work to keep inflation at bay by setting targets and making changes to the cash rate to impact it. The current target inflation rate is between 2% and 3% while the actual rate for the September quarter of 2022 is over 7%...
As discussed, the impact of this is increased cost of living, meaning Australians are stretching incomes to meet higher costs, but there’s more to consider too…
With higher costs, staff may be looking for wage increases which impacts business heavily. Whether that’s through actually paying more to employees or perhaps losing them to competitors who will, creating instability and potential disruption.
It could even go so far as resulting in job losses for businesses who just can’t afford to keep the staff they have in place, which then has knock-on effects for our unemployment rate and so on.
It may get a little worse first, but it’s forecast to improve next year according to RBA Governer, Philip Lowe:
“a further increase in inflation is expected, with inflation now forecast to peak at around 8% later this year”.
“Inflation is then expected to decline next year due to the ongoing resolution of global supply-side problems, recent declines in some commodity prices and slower growth in demand,”
It’ll be great to see some relief for Australians next year, but the Attune team is here to help you navigate whatever may come. For tailored, strategic advice that can strengthen your financial situation, give us a call on 1300 866 113 or send us an email.
