Demystifying Tax Deductions: Your Guide to Business Expenses
Hi there. Welcome to Better Business Insights with me, Liz Jarvis. Today we're going to be talking about tax deductions. Is something tax deductible, or is it not? There is so much conjecture around this. We've got to understand that. In fact, the tax legislation is simple. BUT it has complex carve outs. So anything that you spend, in order to produce income is tax deductible, BUT then there are all these little carve-outs that say personal travel is not deductible. Entertainment's not deductible. Alcohol's not deductible. This is not that deductible. That's not deductible. And so it's actually a little bit complicated, BUT but it's very important that you feel empowered to ask the right questions because the right questions around what is tax deductible for your business will give you the answers to enable you to make better business decisions. Do not rely on your Bookkeeper to tell you what is deductible or not. I've had a case quite recently, where a Bookkeeper really thought that they knew better than the Business Owner who had spoken to the Accountant about what was personal and what was business in that particular business. Or sometimes you have a Bookkeeper who isn't sure what something is, so they just stick it all to drawings and you might have a hundred thousand dollars worth of things that are deductible because of the nature of them. Then your Bookkeeper just doesn't understand the nuances around the tax law in that area. It is too risky to ask a friend, a colleague, someone else's business - what is deductible and what isn't? Because it is always around context. So, a simple conversation around the context of a deduction can really make a huge difference to your business. And at the end of the day, you don't want a tax audit that discovers that things weren't done correctly and sets you back hours and hours of time sorting things out. So look out for tax deductible items. Also remember the rate of tax that you pay is what determines how big, the benefit of the tax deduction is. If you have lots and lots of losses and you want to go and get that deduction for the new $20,000 dollar vehicle? Well, that's all very fine, but actually the tax man won't be paying a cent of it. So don't take tax advice from Salesman either. They have quite often [00:03:00] incorrect. Hope this is helpful. And I'd love to hear from you if you've got any questions around what is tax deductible. Please join us on another episode of Better Business Insights.
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