The 3 expenses you can’t claim on your tax return

Author: Russell Smith
May 7, 2015

I’m often asked, what expenses can I claim in my business and on my tax return.  Well, here’s 3 you can’t claim.

1. Personal expenses

Any expenses you try to claim should be business only.  The technical term is ‘wholly, exclusively and necessary for business’.  So, all personal expenses should be extracted from the accounts.  Possibly easier said than done when you have mobile phone, motor expenses, travel that may have a mix of the two but there are ways to do this in an accurate way.  Anything like toiletries, ipad games or guitars are definitely personal (unless you are a beautician, video game designer or musician – all of which are clients of mine!)

2. Client entertaining

When I tell people in meetings that you can’t claim for client entertaining, I often receive an incredulous look.  But the truth is, client entertaining is NEVER allowable.  You can take out your clients or suppliers for lunch if you like (and I definitely recommend it) but you can’t claim the expenses against your income.

I think the reason why people are surprised is because they see corporate suits out and about with company credit cards.  However, when the company does their tax return, these expenses are added back (or should be!).

3. Fines

Parking fines, tax fines, any fines are all not tax deductible.

So avoid them (obviously).

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