July 22, 2024 • 21 mins
From entertainment expenses to bookkeeping shortcuts, we're exposing the truth behind five business tax myths you can't afford to ignore.
In this episode, Sally demystifies the confusing world of business taxes by debunking five widespread myths. Drawing on legal cases and tax law, Sally provides practical insights to help business owners avoid costly mistakes and optimise their tax strategies. Get ready to smarten up about what really counts as income, deductions, and legitimate business expenses.
In this episode of the Smarten Up! The Tax and Business Podcast, you'll learn:
- The broad definition of income in tax law and why it's often misunderstood (00:42)
- Explanation of assessable income and the impact of statutory provisions on income definitions (01:37)
- Clarification on reporting worldwide income for Australian tax residents and non-residents (02:04)
- Understanding deductible expenses and the two-part test for what constitutes a deduction (02:30)
- Myth #1: Debunking the myth that all client entertainment expenses are deductible and what actually qualifies (05:06)
- Myth #2: Addressing the misconception about employing family members to reduce taxes and the importance of paying commercial rates (08:45)
- Myth #3: The pitfalls of running a business using only Excel and bank accounts, and the benefits of formal accounting systems (12:11)
- Myth #4: Explaining why buying a car in the business or adding advertising doesn't necessarily make it deductible (13:47)
- Myth #5: Discussing the risks of setting up simple business structures with the intention to restructure later (16:21)
Understanding these tax myths can save your business time, money, and headaches down the line. Make sure you’re not falling into these common traps by staying informed and seeking professional advice tailored to your specific situation.
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