The Golden Rule in Taxation (in Australia and most first world countries) is this – you can claim deductions which are directly related to “the earning of assessable income” with some exceptions related to the idea of it being “too soon” such as travel to and from work.
So how does this work, in reality? How can you reliably and confidently account for these costs? And, how can you accurately record them?
It all comes down to this – is it related and how is it related to the earning of income?
Some things are easier than others, for example, you buy a printer, you buy a computer, you pay for insurance.
The first 2 things may be subject to a percentage of personal use (or they might not) but insurance is definitely a business expense.
Let’s go further into this list
What about your rent? Your electricity? If you work from home?
There is a Questionnaire on the ATO website which will help you decide what and if you are entitled to claim a proportion of these amounts. The personal proportion is not claimable.
Digging even deeper, what if you travel to Bali, as a blogger, and do some blogging whilst you’re there? Is the trip claimable? Are your expenses whilst there claimable?
The ATO will want to know – and your Tax Accountant will ask you… is it a holiday? In this scenario its all about context. Overseas holidays or “travel” requires special attention by the taxpayer even down to keeping a diary of events attended and places and people interviewed.
Does it have the flavour of a holiday or is it a work trip – or is it a bit of both?
I run a business called Rapid Entry Online Accounting and can answer these and similar questions. Happy to help out fellow travellers, always.