It’s every business owner’s favourite time of the year: EOFYmas! As the End Of Financial Year celebrations takeover our lives I wanted to highlight the deductions I think we celebrants should be thinking of, and if you don’t have the record of these deductions from the past financial year, maybe try and keep them for this financial year.
I hope this goes without saying, but I’m not your accountant, I’m not the Australian Tax Office, and I’m not your mum, so make sure you run these things past those guys before taking my accounting advice as gospel. If you need an accountant, I can recommend mine but I’m sure there’s 100 within cat-swinging distance of your place.
- Business assets that cost under $20,000 (I bought a $19,900 car on June 29!)
- Generally speaking, clothes cannot be claimed
- Approved charitable donations - Britt and I donate to Destiny Rescue, Compassion, and a few other child and female empowerment related charities that work in third world regions.
- GST, in that, if you are GST-registered, and you charged $1100 for something, your income is only $1000, because (hopefully) you've already paid the $100 to the ATO in your Business Activity Statement.
- Advertising in magazines, directories, Facebook, Instagram, Google, and wedding fairs or expos - it's all a direct business expense. I would include in here Mailchimp costs, costs of building an expo stand, printing things for expos, getting professional help constructing social media campaigns, and graphic design expenses
- Telephone and internet costs - your accountant will be able to help decided what portion is deductible
- Still and video camera purchases used to record your ceremonies or help create social media content
- Income protection insurance
- Membership and association fees, this includes memberships like the AFCC, AMC, or other celebrant associations
- Public liability insurance and other business related insurances like indemnity or even insurance to protect your PA system and equipment being stolen
- Motor vehicle expenses! The best way to claim car expenses is to do a 12 week logbook (maybe leave it until your busiest booking season) and get a percentage of business use (perhaps you just happened to catch the bus heaps during that period) and your car maintenance, fuel, insurance and other car-related expenses are reducing your taxable income
- Office rental costs, either at a commercial property, or if you meet at home, figure out some percentages and get your accountant working
- And if you do renovations to your home office, they're deductible as well
- Computer, tablet, smartphone purchases and software purchases, including those app store purchases or songs purchased for ceremonies
- Magazines and publications for your waiting room (are people waiting in your lounge room?)
- The cost of attending conferences, seminars, OPD, workshops etc
- Your annual celebrant charge from the AGD (have you received your invoice yet? If not maybe get in touch with the AGD or check your spam inbox)
- Small gifts to the marrying couple.
- Printing, stationery, photocopying, secretarial services.
- Hiring a PA system or audio gear, and I'm go to go out on a limb and say that even though it's not listed, purchasing a PA system would be an instant deductible as well (if it's under $20,000... and if you're spending more than $20,000 maybe we should talk)
- Typewriters... maybe I should start a vintage typewriter collection?
- Unfortunately your gardener is not tax deductible
- Keeping a library... which I'm reading as buying books related to celebrancy, a Kindle, books on business, and my understanding of the law would say that your membership to this very website would easily slide in under attending seminars, buying journals, or keeping a library.
- Paying for coffees and drinks at meetings, this can even extend to meals
- Accountant and lawyer fees
- Travel expenses including meals
- Travelling from your home to work if your home is your place of work - but I'd make sure I've got a logbook over a 12 week period for this, and remember, it's valid for five years
- Flights, hire cars, and accomodation - if required for you to be at a wedding
- The cost of doing last year's tax return
- This is a wide net, but it is a legal one: expenses directly related to earning your income. People try and slide clothes into this one but it doesn't work, but if the expense is "directly related to earning your income" I would very encouragingly take it to your accountant.
I know that some of our readers might not totally understand why this matters, so here’s the simple math: just say this year that you charged couples $75,000 (including GST) to be their celebrant. First of all, before anything, the ATO gets $6818, which makes your revenue is $68,182. To make that $68,182 it might have cost you $20,000. That’s $20,000 of all the things listed above.
If you didn’t make any deductions, or if you didn’t know that the things listed above were possible deductions, you’re paying $13,706 tax on the $68,182. Leaving you with just over $34,000 actual cash in your hand after your $20,000 of expenses.
But if you take into account your business expenses and deductions, your taxable income drops to $48,182 and the tax you owe to the ATO is $7,206, which then leaves $40,976 cash in your hand. So recording expenses, keeping receipts etc is worth $6,000 to you. I’d much rather $6,000 in my bank account than the ATO’s.
On a different scale, maybe your income for the 2017-2018 financial year was $20,000, and after going through that list you found $2000 of deductions. Congratulations, you just brought yourself back below the $18,200 tax-free threshold and you’re not paying tax this year.
Side note on the GST: If you’re providing the service overseas, and you’re GST registered, there’s no GST required to be collected on that service.
Here’s the final word from the ATO’s mouth on all these deductions: “The person must have a record to substantiate how the claim was calculated”. In some cases credit card and bank statements are enough.
Did I miss anything? Note it in the comments.
Originally published on the Celebrant Institute: https://celebrant.institute/business/tax-deductions/.