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Re: Expenses vs Deductions? Sole Trader...

Newbie

Views 860

Replies 4

Hi,

I have a small homemade crafts business and am trying to do my taxes myself (due to lack of funds!) and I'm just a bit confused about expenses vs deductions - what should go in myDeductions and what goes in the "purchases and other costs"?  What needs to be itemised separately and added with receipts to back it up?

I feel like my taxes should be super simple but just confused on a few points! Really hoping someone out there can help a little.

 

Eg

I buy raw craft materials, paint, wood etc to use in my business.

I buy things such as paint brushes and other tools to use.

I have bought an ipad to use solely for the admin of my business (non personal use) along with a desk, chair and storage boxes.

 

Do I need to enter each item I buy separately?  Or just enter a total figure for expenses?  Or are some expenses and some deductions?  

Also, there is a section for opening stock and closing stock, it's pretty much impossible to keep track of all of the craft items I buy, it would take me a year to itemise them all and calculate their worth, is it necessary to calculate stock for a small craft business?

 

Thank you so much in advance, 

Sorcha

 

 

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

Taxicorn

Replies 3

@Sorcha80 

 

All craft materials should be added together and deducted as "Materials".

Include storage box separately.

 

Any "asset" like an iPad, Desk & Chair can be deducted as per business yse so if it cost $800 and you use it 75% for your business then include $600 (800 x0.75%) as an imediate deduction.

 

At this stage I would suggest that no stocktake be kept as it would probably see less than +/- $5,000 movement.

(Difference between 1/7/2020 amd 30/6/2021).

 

Don't forget to include mobile, internet and either cents per hour or actual running costs.

https://www.ato.gov.au/General/property/property-used-in-running-a-business/running-your-business-fr...

 

https://www.ato.gov.au/uploadedFiles/Content/IND/Downloads/Working-from-home.pdf

 

 

4 REPLIES 4

Most helpful response

Taxicorn

Replies 3

@Sorcha80 

 

All craft materials should be added together and deducted as "Materials".

Include storage box separately.

 

Any "asset" like an iPad, Desk & Chair can be deducted as per business yse so if it cost $800 and you use it 75% for your business then include $600 (800 x0.75%) as an imediate deduction.

 

At this stage I would suggest that no stocktake be kept as it would probably see less than +/- $5,000 movement.

(Difference between 1/7/2020 amd 30/6/2021).

 

Don't forget to include mobile, internet and either cents per hour or actual running costs.

https://www.ato.gov.au/General/property/property-used-in-running-a-business/running-your-business-fr...

 

https://www.ato.gov.au/uploadedFiles/Content/IND/Downloads/Working-from-home.pdf

 

 

Newbie

Replies 2

Thank you so much for replying!

That's great re the stocktaking, I wasn't looking forward to that! 

 

So all the other stuff (materials, tools, tablets etc) should go into myDeductions?  Should anything go into the "Purchases and other costs" as per the below fields when entering business income and losses? 

Thank you

 

 

Non-primary production – Business expenses

Opening stock
Enter whole numbers only
$.00
 
Purchases and other costs
Enter whole numbers only
$.00
 
Closing stock
Enter whole numbers only
$.00
 
Cost of sales
 
Cost of sales $0.00 read only
$0.00
 

Taxicorn

Replies 0

@Sorcha80 

 

Not realy familiar with myTax as I don't use it.

 

Howeer, I would imagine you can put in the 'Cost' of the Materials "Purchases & other costs".

 

Any other business deductions would HAVE to be included in the business section, not the personal section.

 

ATO Community Support

Replies 0

Hi @Sorcha80

 

Your a great help as always @macfanboy thank you. If your using myTax to report your business income make sure you have personalised it correctly to get all the labels you need at step 3.

 

If your having problems the help function in myTax as well on the right hand side is often useful to understanding what goes where. Also we have real time consultants you can access for guidance through Live Chat too.