Claiming Business Expenses

Each industry sector has business expenses that are specific for its area and therefore it is not possible to provide a definitive list of expenses.

The technical position for tax deductible expenses is that they must be “wholly, necessarily and exclusively” for business purposes. They must also be “reasonable”. What does this mean?

Wholly means altogether, collectively, completely, fully, in the aggregate.

Necessarily means that the business could not function without incurring this expense. It would be impossible to be a self-employed seamstress without a sewing machine or a carpenter without a saw.

Exclusively means that there is no personal use of the expense. It is not sufficient to say that as a food critic, all of your meals are business expenses as we all need to eat to live. If you were
undertaking work reviewing restaurants and you sampled the food and had to pay for it then that may be allowable. There is fine line between the two scenarios.

You must ensure that the expenditure is reasonable. If you need to buy a television monitor for work related purposes it must simply be fit for the purpose it has been purchased for, not a superior model because you want to watch 4D films with surround sound.

Insight: Discuss your expenses with your accountant; you may be surprised what is and isn’t an allowable expense.

Leave a Reply

Your email address will not be published. Required fields are marked *