Tax Fundamentals for Accountants: Allowable Deductions - Core Issues in Practice

Work Related Expenses – Are They Tax Deductible

Determining eligible tax deductible expenses for an employee is not always clear cut. This session provides tips and traps to be aware of to help you gain a better understanding, including:

• What’s deductible and what’s depreciable
• Explaining methods to use when private use apportionment is required (ie. phone, data and internet claims ATO QC 46119)
• Work from home tax deductible options
• Motor vehicle claims, including:
  • claim options available
  • how the load carrying capacity of a vehicle can affect the claim
• Substantiation requirements
• A review of TR 2020/1 relating to employee deductions
• Practical examples

Carrying on a Business: Problem Areas in Deductions

The profit and loss statement of a business generally has a nominal number of accounts under the income section, with numerous expense categories listed from A to Z. This session aims to increase your understanding of some of the types of expenses available to business owners and their tax treatment, including:

• Home based businesses:
  • deductions available
  • the CGT implications
• Motor vehicles and the one tonne carry load distinction
• Business and private use apportionment and the FBT implications depending on the entity
• The interaction of business expenses and GST
• The rules for prepayments
• The tax treatment of expenses incurred for:
  • commencing a business
  • ceasing a business
  • blackhole expenditure
• The timing of deductions and when a business expense is ‘incurred’
• Practical examples

When are Travel Expenses Tax Deductible?

Travel expenses can be one of those deduction categories that prompt the ATO into looking a bit deeper. To assist in improving your understanding of when travel costs are tax deductible, this session delves into the travel expense rules, including:

• The conditions required to be met when transporting bulky equipment
• Costs incurred when living away from your usual residence
• Exceptions from the substantiation provisions and the ATO reasonable amount tables
• When part of the travel costs include private activities
• What if you have two (or more) places of work?
• Substantiation and the travel diary requirements
• Explaining the difference between a travel allowance and a living away from home allowance
• A review of the ATO’s relevant recent rulings (TR 2021/1 and TR 2021/D1)
• Practical examples

Capital Allowances (Depreciation): Spoilt for Choice

As an accountant young or old, you could be forgiven for being a bit confused as to which depreciation method you should be using. The recent temporary full expensing initiative has added to the choices. This session aims to unpack the various options available, including:

• Eligibility requirements to use accelerated depreciation rates
• Temporary full expensing and the interaction with the small business instant asset write off
• Opting out by choice and examples where you may decide to do so
• The backing business investment measure
• Other depreciation alternatives:
  • self-assessed effective life estimates
  • using the Commissioner’s rates
  • prime cost or diminishing value
• Depreciation cost limit for cars
• Low value asset pool (including interaction with temporary full expensing)
• Practical examples

Capital Works Deductions: Not to be Confused with Capital Allowances

Capital works deductions can sometimes be overlooked, particularly in relation to eligible investment property claims. This session introduces you to the capital works deductions that can be available, including:

• The distinction between items that form part of premises and items that are considered to be plant (TR 2007/9)
• What assets can the capital works claim be applied to?
• Why it is the construction costs and not the purchase price that matters
• What information is required to calculate the capital works claim?
• Who can make the claim and how it is calculated
• What if you can’t obtain actual construction costs?
• Interaction of the capital works deduction and the capital gains tax calculations when a property is sold (incl. TD 2005/47 and PSLA 2006/1 (GA))
• Practical examples