When can laundry expenses be claimed as a tax deduction?
As reported in last week’s top tax tips, the ATO is continuing to scrutinise work-related expense claims.
In particular, a claim for clothing and laundry expenses would not succeed if:
- The claim is for an ineligible piece of clothing (e.g. such deductions are only allowable for workers required to wear a work uniform – no deduction would be available for ordinary non-descript business suits that do not bear a company logo);
- The expense is claimed without being able to prove that the money was actually spent (e.g. many people claim a blanket deduction of $150 for clothing, laundry and dry-cleaning without being able to produce receipts to prove - in the case of an ATO audit - that this money was actually incurred);
- The taxpayer cannot explain on which basis the claim was made (e.g. there are no details or supporting evidence on how these laundry costs were calculated).
When do small businesses qualify for the FBT car parking exemption?
With the small business entity threshold having increased to $10 million aggregated turnover for the 2017 income tax year (up from $2 million aggregated turnover the year before), small businesses can now provide exempt car parking fringe benefits to employees in the 2018 FBT year (i.e. from 1 April 2017 to 31 March 2018) if:
- Either the aggregated turnover or the gross income of the business is less than $10 million in the 2017 income tax year;
- The parking is not provided in a commercial car park; and
- The small business is not a government body, a listed public company (or a subsidiary of a listed public company).
The change in the small business threshold (i.e. from $2 million to $10 million turnover) means that more businesses should now be able to access the various concessions available for small businesses (but note the turnover threshold for businesses accessing the small business CGT concessions remain at $2 million).
Sole traders must always lodge tax returns (regardless of income earned)
There is a misconception that sole traders earning less than the $18,200 tax-free threshold do not need to lodge tax returns.
Please contact us if you are a sole trader who has not lodged a tax return so that we can assist you to lodge your individual tax return (including the supplementary section) as well as the business and professional items schedule for individuals.
If you no longer want to operate as a sole trader, we can also assist you to restructure your business into a more suitable structure depending on your specific circumstances (e.g. through making use of the new restructure rollover).